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Billionaire to the rescue: Apple stocks climb with new cash injection

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.

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:

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.

Author | Mich Atagana

Mich Atagana
Mich started out life wanting to be a theoretical physicist but soon realized that mathematics was required. So, she promptly let go of that dream. She then decided that law might be the best place for her talents, but with too many litigation classes missed in favour of feminist... More

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