Apple’s biggest cheerleader on Wall Street, Carl Icahn, is getting rid of all of his AAPL shares after the iPhone-maker reported its first year-over-year decline in revenues for the first time in 13 years.
The iconic investors has insisted for years that Apple shares are grossly undervalued and has made over $3.4 billion investing in Apple. Now Carl is throwing in the towel even though he still thinks the stock is ridiculously cheap.
“I don’t think it’s a price point [that would get me to go back into Apple stock],” Icahn told CNBC’s Scott Wagner this morning. “I think it’s my opinion about what is happening in China… I got out because I’m worried about China.”
Apple lost $40 billion in market cap following Tuesday’s disappointing earnings report. iPhone sales declined for the first time ever and if Apple runs into problems in China it could be a while before iPhone sales see any growth.
Investors’ fears of troubles in China aren’t unfounded. Growth in greater China dropped 26% last quarter. The country also recenty banned iTunes Movies and the iBookstore, which has led some analysts to worry Apple could get banned from China due to its privacy policies.
“I think the stock is very cheap still on a multiple basis,” said Icahn. “I’m not the great expert on China and that bothers me… I’m worried about it.. Apple it’s not like a tsnuami hit it, but it could hit it.”
Apple stock has continued to drop today, falling 2.02% to $95.80 per share so far. If the price keeps dropping Icahn could get back in on what he has called one of the great stocks of the century for super cheap.
“I hope to get back into it one day,” said Icahn.
In a letter sent to investors today, Icahn blames Wall Street, the media, and investors for keeping AAPL share value artifically low:
“It is our belief that large institutional investors, Wall Street analysts and news media alike continue to misunderstand Apple and generally fail to value Apple’s net cash separately from its business, fail to adjust earnings to reflect Apple’s real cash tax rate, fail to recognize the growth prospects of Apple entering new categories, and fail to recognize that Apple will maintain pricing and margins, despite significant evidence to the contrary. Collectively, these failures have caused Apple’s earnings multiple to stay irrationally discounted, in our view.”