Carl Icahn Sold Entire Apple’s Stock
The tech giant’s shares fell 3% after the news
On Thursday, Apple Inc. stock declined 3% after the activist billionaire investor, Carl Icahn, sold the entire stock he held in the tech giant due to the concerns over weakening market of China. Having earlier sold his shares in February, Mr. Icahn currently held 45.8 million shares of the company. The billionaire has expressed that he roughly made $2 billion off the Apple trade.
Almost three years ago, Mr. Icahn acquired the stake in the company and then he had been quite optimistic about the stock performance and called the investment a “no brainer.” Moreover, in May 2015, Mr. Icahn had asserted that Apple stock ought to be valued at $240 which –at that time –was 90% more than the trading price. So, why did he sell the entire stock?
The chief reason is the China’s economic slowdown. Also, in an exclusive interview with CNBC, the activist investor cited that he was “very cautious” on the overall U.S. stock market and unless the spending power of the people hasn’t been increased, the market is likely to face its doomsday. Additionally, he praised the tech giant along with its CEO, Tim Cook, and said: “I think it’s the greatest company.”
However, he has concerns over how the Asian superpower’s economic crux would lack fiscal stimulus making it more difficult for the Cupertino, Calif. firm to carry out the business in the region. During the call with the investors to discuss about its second quarter earnings the tech giant disclosed that in comparison with year-ago same period, the mainland China’s sales declined 11%.
The world’s most valuable company reasoned that the sales decline had been due to the tough year-over-year comparison and region’s macroeconomic issues. The company cited that sales of iPhone 6S hadn’t been great due to the high popularity of iPhone 6 and iPhone 6 Plus. Apple’s CEO also put the blame on Hong Kong as its dollar is linked with the U.S.’s therefore making the international shopping and tourism prohibitive.
However, the decline in the China’s market is not only because of the macroeconomic issues. People in China have been vigorously buying the mobile phones from local manufacturers like Xiaomi and Huawei Technology. Further, the execution of business in China is a bit tedious. The Chinese government has strong surveillance and it monitors what is offered to its people. Recently, the government banned Apple’s iBooks and iTunes movies across the region. The move came in after Beijing imposed strict restrictions on online publishing –specifically foreign films. Such restrictions will have big impact on the tech giant’s next revenue trigger: services.
The earnings reported by Apple on Tuesday was the first time for the company in thirteen years to post a revenue decline. The tech giant’s sales in China –which is the important market for the company after U.S. –fell drastically. Furthermore, the company has anticipated a not-so-good quarter for the current period in terms of the global revenues.
When Mr. Icahn was asked about him investing back into the firm he cited, “I don’t think it’s the price point. I think it’s my opinion about what is happening with China. I think the stock is very cheap on a multiple basis. China could be a shadow for it, and we have to look at that.”
After the move taken by Mr. Icahn, not only Apple’s stock plummeted but Dow Jones Industrials also bear the ongoing pressure and ended down by 210 points. Apple stock closed at $94.83 at the market which traded on Thursday.