14 DAY TRIAL // Samsung’s brand image has certainly suffered a massive blow these past two months, culminating with a permanent halt in production for the Note 7. But the Galaxy Note 7 discontinuation doesn’t affect only Samsung and its customers.
There are many other factors to take into account, including the financial situation of component suppliers, especially the battery supplier, and investors at the South Korean company. Some US carriers and consumers aren’t pleased with how the company conducted the recall, and it seems that investors aren’t either.
A report by Reuters shows that investors want Samsung to find the cause of the Note 7 fires quickly and release a new model to the market. Samsung shares dropped 8% on Tuesday and 0.8% on Wednesday, while some analysts predict that the Note 7 situation might cause a $17 billion financial hole for the company. It was the biggest share drop for Samsung in the past eight years and, interestingly enough, Apple hit a fresh year-to-date high in yesterday’s session.
Investors and analysts say the damage could be reduced if the company discloses the reason replacement smartphones started catching fire.
Samsung must explain the battery flaw to investors and consumers
"There needs to be explanation from Samsung in order for consumers to understand that problems won’t occur in the next models ... Samsung needs to clearly explain and admit what went wrong," said Kim Hyun-su, a fund manager at IBK Asset Management who owns shares in Samsung.
Investors might be rushing Samsung to release the new Galaxy S8 to the market, but it will be mandatory to reassure customers of extensive battery tests in all upcoming smartphones, in order to regain some of the lost consumer trust.
However, some analysts have told CNBC that the Note line of smartphones is probably going to face long-term damage and we might not see a Galaxy Note 8 or Note 9. Meanwhile, Samsung has started boosting production for the Galaxy S7, and significant discounts would surely help increase sales as well.