Activist investor Carl Icahn has made a public plea to Apple CEO Tim Cook asking him to enact a large share buyback. In an open letter Icahn claims that Apples shares, presently trading at about $128, are grossly undervalued and should be trading at double that price – a move that could make the California-based technology company worth $1.5 trillion.
The letter, which was publicized on Monday, is meant to influence Apple’s top management as well as its shareholders. Apple already claims the title of world’s most valuable company, but Icahn believes that its shares are worth 90 percent more than they are currently trading at. Icahn wrote, “With Apple’s shares trading for just $128.77 per share versus our valuation of $240 per share, now is the time for a much larger buyback.”
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Icahn is Apple’s largest individual shareholder. According to Bloomberg, his 48 million shares are estimated to be worth $6.3 billion. If Apple shares were to hit the $240 mark, he personally stands to gain about $5.3 billion.
Icahn wants Apple to foray into the television and automobile market. According to the investor, “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.”
Media speculations on proposed Apple television have intensified in recent months. However, Apple is yet to announce any concert plan to manufacture television sets. The company is designing a futuristic driverless cars, but there are little signs that Apple intends to enter the competitive automobile market.
The legendary activist shareholder enjoys considerable clout within the investor community. Apple’s stocks spiked 1.8 percent to $130.72 on Monday after Icahn’s letter surfaced on the internet and twitter. His public statements alone brought $8 billion to Apple investors in a single day.
