Samsung Electronics Co Ltd (OTCMKTS:SSNLF) shares were getting a hard reset on Wall Street after the company said it had halted production of its flagship Galaxy Note 7 devices after a string of replacements were alleged to have caught fire.
Already on Friday Samsung’s over the counter share price was down 15.6% to $1350. There were further reports by The Verge at the weekend that some devices may have been replaced up to five times and still caught fire. Meanwhile, Apple Inc’s (NASDAQ:AAPL) shares were up nearly 2%, touching its highest point of 2016, $116.47, in intraday trading on Monday.
Telecom carrier AT&T (NYSE:T) has stopped selling the phones entirely, while the US Consumer Product Safety Commission (CPSC) says it is "moving expeditiously" to investigate following reports that one Note 7 device caught fire and forced a passenger aircraft flight to be aborted.
Samsung has issued a statement saying it is investigating the fires, though it has yet to determine that a "product safety issue exists." It’s possible that Samsung is letting US regulators take the lead on the investigation after it was criticised for launching its initial recall of the Note 7 without going through the CPSC.
In many cases, consumers are being urged to simply demand a refund.
The exploding Note 7 fiasco is likely to cost far more than lost revenue. If some of the devices have been replaced multiple times it will bode badly for the top Korea smartphone manufacturer’s reputation in the highlight competitive marketplace.
But this isn’t the only company confronted in recent years by “incendiary batteries”. Arch-rival Apple suffered from reports of some of its devices catching fire in China, among other reports. Batteries are often regarded as the weak link in smartphones, prone to overheating and to causing processor malfunctions in devices.