In an open letter to Tim Cook, billionaire investor Carl Icahn says Apple’s stock is still incredibly undervalued, and that now is the time for a much larger stock buyback.
Icahn’s firm believes that Apple shares are really worth $240 today, despite trading around $130.26 this morning, an increase over his previous estimate of $216. According to his letter, Icahn believes Apple is poised to dominate two new markets – television and the automobile.
“After reflecting upon Apple’s tremendous success, we now believe Apple shares are worth $240 today. Apple is poised to enter and in our view dominate two new categories (the television next year and the automobile by 2020) with a combined addressable market of $2.2 trillion, a view investors don’t appear to factor into their valuation at all.”
Along with dropping info on what he believes Apple shares are worth, Icahn says he thinks Apple is preparing to introduce an “Ultra High Definition television set” as well as a 12.9 inch iPad that would act as an improved “second screen” to the Apple UltraHD TV.
Noting Apple’s predilection for secrecy, Icahn points to the company’s aggressive increases in R&D spending as a sign that Apple is about to enter the television and automotive markets with new products. Rumors of an Apple TV set release have been floating around the Apple rumor mill for years but Apple has focused solely on the Apple TV console.
Icahn expects Apple to sell a 55-inch and 65-inch UltraHD TV starting in 2016, with revenues reaching $15 billion the first year, and then $37.5 billion by 2017, with an average selling price of $1,500. Apple is expected to unveil a new Apple TV set top box at WWDC, but after years of dubious rumors, we doubt we’ll see an actual TV set anytime soon.
Source: Carl Icahn