Samsung Shares Hit New Record High Despite Galaxy Note 7 Recall
The Galaxy Note 7's exploding battery debacle not only triggered a massive PR nightmare for Samsung, but its withdrawal was instrumental in the company incurring revenue losses.
Due to this situation, shares of Samsung Electronics dropped soon after the mishap occurred. However, investors have now reposed faith in the company and their confidence in Samsung Electronics is evidenced by the performance of its stock.
Despite all the troubles and hard times that the company has faced so far, the shares of Samsung Electronics shares hit a new record high of 1.86 million won per share, which translates to approximately $1,550. This figure is not the intra-day trading high, but the closing price of the stock on Jan. 9.
This figure was a 2.82 percent increase of 51,000 won (approximately $42) from the previous day.
This splendid performance will further cement investors' confidence in Samsung Electronics win.
Amid all the brouhaha surrounding the Galaxy Note 7, IBK Securities' analyst Lee Seung-woo predicted weak sales for the company in Q4 2016.
"Some said initially the Galaxy Note 7 could be the best smartphone ever, but now it's possible the phone will go down as the worst ever," Seung-woo said.
Samsung's shares were down 6.3 percent since July 2016. This was a record drop from the company in over four years. Analysts forecasted that the Galaxy Note 7 could leave a major impact on the company's brand name, which would require Samsung to bounce back strongly to bring about a major recovery against its rivals.
What Has Turned Things Around For Samsung?
Samsung has risen from the ashes like a phoenix and it can be attributed to the company's earnings guidance for Q4 2016. The company estimates it will post a 50 percent YoY increase in its operating profit. The estimation from Samsung comes despite it having to bear the financial setback due to the recall of the Galaxy Note 7.
A silver lining for Samsung has reportedly been the robust sales of displays and chips, which have aided in offsetting the losses thanks to the Galaxy Note7. The sales of the chips and displays have assisted Samsung in overcoming the losses it had incurred and stalled its profit earnings.
Samsung is slated to present its full earnings report for the fourth quarter of 2016 and investors will likely stay interested in its stocks. The company is also poised to roll out its flagship Galaxy S8 smartphone in the near future, which could give a fillip to Samsung's revenue and strengthen investor confidence.