Carl Icahn says Apple stock should be worth $216 per share today, not in the future

Posted:
in AAPL Investors edited February 2015
Activist investor Carl Icahn this week once again heaped praise on Apple, saying the company's stock continues to be vastly undervalued and should be trading today at a price of $216.

Icahn
Activist investor Carl Icahn. | Source: Forbes


Icahn continues to see the company's share price as an opportunity for Apple Chief Executive Tim Cook and his board of directors to buy back more shares of its own stock. In an open letter published this week, he praised Cook for saying that he wants to give money back to shareholders.

"This position with respect to excess cash is great news for shareholders, and we look forward to the capital return program update in April, anticipating it will include a large increase to share repurchases," Icahn wrote.

As of the end of last quarter, Apple had a massive $179 billion in cash. As its money has continued to grow, Apple has increased its capital reinvestment program, authorizing share repurchases and dividend payments.

Apple has signaled that it will revisit and update its dividend and buyback plans in April, as it has done in years past.




And although shares of AAPL stock are trading at all-time highs, Icahn still believes the stock is dramatically undervalued. As such, he believes Cook and his team would be wise to spend even more money to repurchase shares at their current value.

The billionaire said in his open letter that he believes the market should value Apple at a price to earnings ratio of at least 20 times. Together with net cash of $22 per share, that would value Apple at $216 per share.

"This is not a future price target," Icahn wrote. "$216 is what we think Apple is worth TODAY."

Icahn said last month that he was planning to increase his price target for Apple, which was previously set at $203. That assessment was reached last year, before the iPhone maker reported a blockbuster holiday quarter in which the company earned $18 billion in profit.
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Comments

  • Reply 1 of 77
    irelandireland Posts: 17,798member

    And just by coincidence he owns $1B+ in AAPL.

  • Reply 2 of 77
    For once, I agree with Icahn. Apple is, and has always been, undervalued, especially when compared to other companies in the tech sector - even though tech is just part of what makes Apple who they are.

    It's great to see investors pushing Apple positive to make their money, instead of the typical "analysts" who throw out crap bad "news" about Apple in order to drive the price per share down so they make their money on shorting the stock.
  • Reply 3 of 77
    Now where is Warren Buffet?
  • Reply 4 of 77
    cnocbuicnocbui Posts: 3,613member
    So Carl wants Apple, to use shareholders money to buy back shares from some other shareholders so hopefully spurring the share price to rise so he - who obviously wouldn't sell - and some other shareholders can potentially make a killing - or Carl, who by then will own an even larger percentage of Apple, can get himself onto the board and start running Apple the way it ought to be run.

    Call me a cynic but I really don't think Carl has Apple's best interests at heart.
  • Reply 5 of 77
    Pump & Dump
  • Reply 6 of 77
    evilutionevilution Posts: 1,399member

    How much money does this guy need?

    Clearly no one really listens to him, most of the stuff that he wants Apple to do is stuff that Apple would have done anyway.

    Bigging a company up as much as this is only going to end up in disappointment.

  • Reply 7 of 77
    mpantonempantone Posts: 2,030member
    Quote:

    Originally Posted by cnocbui View Post



    So Carl wants Apple, to use shareholders money to buy back shares from some other shareholders so hopefully spurring the share price to rise so he - who obviously wouldn't sell - and some other shareholders can potentially make a killing - or Carl, who by then will own an even larger percentage of Apple, can get himself onto the board and start running Apple the way it ought to be run.



    Call me a cynic but I really don't think Carl has Apple's best interests at heart.



    Carl only cares about himself. He has no interest in building businesses, just increasing his cash pile. When he gets control of a company he dismantles business units, like spare parts.

  • Reply 8 of 77
    pazuzupazuzu Posts: 1,728member
    Smart- he must be projecting for the future AWatch release.
  • Reply 9 of 77
    Quote:
    Originally Posted by mubaili View Post



    Now where is Warren Buffet?



    A long time ago Warren Buffet said that he does not buy technology companies because he does not understand them. That's good advice for anyone - don't buy what you don't understand. That's a self-imposed limitation that anyone can overcome, besides, Apple is far too complex an institution to be narrowly classified as a "tech company". 

     

    He's done pretty well for himself and BRK.A shareholders simply by buying companies that make things he does understand, like bricks, disposable razors, soap, soft drinks, etc.

     

    The irony is that reasons he bought those companies are exactly, precisely, the reasons he should have been buying AAPL for years. It's his decision to classify it as a "tech company" or not. Everyone lives within the lesser of the limitations they actually have, or those they choose to impose upon themselves. It takes wisdom to know the difference.

  • Reply 10 of 77
    Tim Cook sholder should go to Mr Ichan and offer to take all his stock off him as part of the shareholder buy-back.
    Then we'd see what he says then.

    With one hande he wants apple to buy back shares but just not his shares.
    I find that a wee bit hypocritical IMHO.

    Before anyone asks, I am an Apple Shareholder. I bought at $27 many, many years ago. I will be selling my holding later in the year when I retire. Apple can have my holding at that time.
  • Reply 11 of 77
    cnocbuicnocbui Posts: 3,613member
    Quote:

    Originally Posted by sog35 View Post

     

     

    GTFO.   Nothing Icahn suggested would hurt Apple long term.  




    It won't do them any good either.  Saddle yourself with gobsmacking amounts of debt so you can make me richer.  You should take your own advice.

  • Reply 12 of 77
    Keep inflating that (stock) bubble, Carl. It's gonna burst someday, but you'll unload it before then, I'm sure.
  • Reply 13 of 77
    Quote:

    Originally Posted by rotateleftbyte View Post



    With one hande he wants apple to buy back shares but just not his shares.

    I find that a wee bit hypocritical IMHO.

    Why? The stock is liquid, there are plenty of shares available for purchase. Apple is sitting on too much cash for most shareholders liking (real investors not Apple fanboys) - they should be using it to add value to the company, faster than with it just gaining interest.

  • Reply 14 of 77
    ireland wrote: »
    And just by coincidence he owns $1B+ in AAPL.

    And we should judge him not by his words, but his deeds. If he really believes this, he should pour his every investable dollar in Apple, no?
  • Reply 15 of 77
    Quote:

    Originally Posted by Ireland View Post

     

    And just by coincidence he owns $1B+ in AAPL.




    Exactly.  Large AAPL investor says AAPL is undervalued.  In other news, hydroanalysis lab confirms that water is indeed wet.

  • Reply 16 of 77
    Tim Cook sholder should go to Mr Ichan and offer to take all his stock off him as part of the shareholder buy-back.
    Then we'd see what he says then.

    With one hande he wants apple to buy back shares but just not his shares.
    I find that a wee bit hypocritical IMHO.

    Before anyone asks, I am an Apple Shareholder. I bought at $27 many, many years ago. I will be selling my holding later in the year when I retire. Apple can have my holding at that time.

    You'll just be holding cash at that point? If so, inflation will simply slowly eat away at your savings. I plan on staying in the market post-retirement.
  • Reply 17 of 77
    Or, his plan B is to liquidate the company's assets and distribute them to shareholders.
  • Reply 18 of 77
    mpantone wrote: »

    Carl only cares about himself. He has no interest in building businesses, just increasing his cash pile. When he gets control of a company he dismantles business units, like spare parts.

    And he's doing what anyone his position should be doing. It's valuable to recognize and acknowledge that fact.
  • Reply 19 of 77
    mpantonempantone Posts: 2,030member
    Quote:



    Originally Posted by sog35 View Post

     

    GTFO.   Nothing Icahn suggested would hurt Apple long term.  




    That's right. That's because Carl doesn't have control of Apple. He's just a shareholder (albeit one with a large position).

     

    Carl's destruction -- particularly the asset stripping -- comes after he seizes control of a company. The classic example was TWA.

     

    His letter is really addressed at the market with the hope that Apple's board will approve the continuation of the capital reinvestment program (stock buyback and dividends). He's just trying to drive the share price higher for his benefit.

     

    I'm an AAPL shareholder myself, so I materially benefit from these types of comments from him, but that doesn't change the fact that Carl only cares about himself.

  • Reply 20 of 77
    Or, his plan B is to liquidate the company's assets and distribute them to shareholders.

    His percentage of holdings is very small in comparison to the largest institutional holders of AAPL.
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