Things are looking a lot better for Apple right now than they did a little while ago. The company seems to have just cracked the ceiling of its dismal stock imprisonment after hitting US$500: the highest Apple stocks have been in eight months.
No ad to show here.
The latest success has everything to do with billionaire Carl Icahn‘s decision to buy one-billion dollar stake in the company. The billionaire told the world about his stake in Apple in two tweets:
We currently have a large position in APPLE. We believe the company to be extremely undervalued. Spoke to Tim Cook today. More to come.
— Carl Icahn (@Carl_C_Icahn) August 13, 2013
Had a nice conversation with Tim Cook today. Discussed my opinion that a larger buyback should be done now. We plan to speak again shortly.
— Carl Icahn (@Carl_C_Icahn) August 13, 2013
When Carl Icahn says he is talking to CEO Tim Cook and has a large position in a company you take notice and share prices climb. With an estimated net worth of US$20-billion, he has made significant investments in many companies including Time Warner, Motorola, and Herbalife.
Icahn believes that Apple is undervalued and believes the stock could be worth as much as US$700 a share if Cook pushed for a larger stock buyback — US$150-billion to be precise.
“If Apple does this now and earnings increase at only 10%, the stock — even keeping the same multiple currently — should trade at $700 a share,” Icahn is quoted as saying by the Financial Times. He also says that the company has “huge borrowing power, little relative debt and trades at a low multiple.”
Apple has had a less than impressive couple of months. The company’s last quarterly report showed that its sales are up only one percent from last year to US$35.3-billion, landing the company a net profit of US$6.9-billion, or US$7.47 per diluted share.
It seems thing may be looking up for the Cupertino-based giant.
