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.”
Buster Hein is a freelance writer who lives in Phoenix, Arizona. Twitter: @bst3r.
6 responses to “Mega-investor Carl Icahn gives up on AAPL”
Good riddance! Fewer AAPL shares in it for the short term now. This will help the stock tank, so that I can buy more shares at a discount. Also, Apple will be able to do their buyback of shares at a reduced cost. At $95, this is a 2.4% dividend stock.
All this does is it creates a buying opportunity. Watch the P/E ratio and figure out where the new low is. Stocks typically trade where there is a high/low with respect to the P/E ratio, if you can get AAPL at a low P/E, than you hang on to it until the P/E ratio goes back up to it’s high. The biggest problem with Apple is that their P/E ratios have gone much lower over the past few years since they are kind of flatlining in terms of growth. I personally think this Christmas is either going to be really good or mediocre, but after we see what Apple has in store for WWDC, we’ll find out if this is going to be a big OS update year or not. I know that Apple’s going to be kicking out some new Macs, which will help a little, a new Apple Watch, which will help a little, but yes, Apple has to kick ass with a new iPhone 7 that will be a huge improvement over the 6S/6SPlus.
There has been very little innovation over the last few years… people leaving the company… shortsightedness and no end of glitches which have caused me to stop updating even though my iOS devices keep insisting I do so several times a day and there’s no way I can find to turn it off. All very sad. Love my Macs though.
That’s strange. I’ve been updating my iPhone 6, Mac Pro, iMacs and MacBook Pro and haven’t seen this “no end of glitches” you’re talking about. I use my Apple devices for business and work on my Macs at least 10 hours a day. I have the latest OS updates and everything is working smoothly for me. If you’re having problems, call Apple Support or make an appointment at your local Apple Store to get help sorting out the “glitches” rather than just living with them.
This is a strategic move by Icahn that investors do all the time to reap profits just by manipulating PR. Icahn sold his shares when the stock was at a high point because he was aware of the slightly reduced earnings by Apple. He announced his exit from Apple stock which will cause other panicky investors to do the same, thereby driving the price down even further. At some point Icahn will buy Apple stock back at a greatly reduced price, expressing confidence in the stock and causing the stock price to rise. This will cause panicky investors to again start buying Apple stock, further increasing the stock price.
This is what I detest about investors and the stock market. It rises and falls based on such things as news articles, rumors and sales predictions. Investors have no stake in the company other than how much money they can make from it. Apple is still insanely profitable, even in its first down year in 13 years — more so than nearly 99% of the companies on this planet. Other companies would KILL to have such “bad” sales figures as Apple reported this year.
Ideally I’d like to see Apple exit the stock market entirely by buying back all its stock and going private. That way they’d be free to operate without all the hoopla and panic brought on by investors and pundits who have various other agendas than just making good products that people love. The short-term profits game of the stock market puts unnecessary pressure on companies that distract them from simply doing a good job at what they do. Who cares if Apple stock is slightly down but still in a monstrously high range? Investors, because they only see the company through the eyes of how much they gained or lost today.
“In a letter sent to investors today, Icahn blames Wall Street, the media, and investors for keeping AAPL share value artificially low.”
Sooo, Icahn thinks the value is artificially low, yet he’s quick to dump it because of China, Apple’s newest and most problematic market. All the billionaire investor ever wants is quick, big money. He gets in for cheap, makes a bundle by agitating the market, sells when there’s what he perceives any sign of trouble, and suggests everyone do the same. I know another billionaire like that, one who imagines he can “make America great again”, as if it’s not already the greatest country in the world. Too bad Icahn doesn’t have enough faith to stick around while Apple displays exactly how great it really is. What a fair-weather, greedy investor “Icahn’t” is.