Days after the viral video that shows a man was forcibly dragged off an overbooked United Flight, shares of United Continental holdings Inc. slides 1.1% .
United Continental Holdings(UAL:US) wiped about $255 million off its market capitalization. The company’s market cap was $22.5 Billion as of Monday’s close, according to Bloomberg.
At its trading low Tuesday, United’s shares opened at $70.15 and falls to $68.36, down of 4.41% which for a moment erased nearly $1 Billion in Market capitalization and closed at $70.71.
The confrontation between the passenger and the United Airlines crew members was caught on video, and like wild fire, went viral on social media and was seen by hundreds of millions of people around the world. The viral video drew a lot of negative reactions from people who watched the video which United Airlines CEO Oscar Munoz issued an apology last Monday, but further prompted negative feedback after he credited the crew involved in the incident for following established procedures. The CEO followed up with a second apology letter Tuesday offering his “deepest apology for what happened” and said that the airline would conduct a review of its policies and procedures to be completed this April 30.
“No one should ever be mistreated this way,” he said in a statement, calling the event “truly horrific”.
Market Watchers say that social media and the fast dissemination of information could clearly affect and pose problems to companies and cause their stocks to fluctuate.
“Before social media like Twitter and Facebook, before the advent of fast communication, maybe they can get away with (something like this),” says Gary Kaltbaum, president of Kaltbaum Capital Management. “But it is a whole new ballgame. You spend a lifetime and a ton of advertising money trying to gain a great reputation with a moniker like “Fly the friendly skies,” but it takes one incident to completely (undo it). It’s tough to recover quickly with everyone seeing it, and makes people think twice about who they will fly with. United’s stock (today) reflects the negative potential.”