Citing the risk of China’s influence on the stock, Carl Icahn, the the billionaire activist investor who has long been one of the most prominent voices declaring the company to be undervalued says he has sold his entire stake in the technology firm.
Apple now sells more in China than it does in the whole of Europe after years of high growth, reaching triple-digit percentage points in 2015. However with revenue dropping 26% year-on-year in the company’s latest quarterly earnings, sales in the country are now shrinking.
But China slowdown is not the primary concern for Icahn. The barriers to trade that China’s authoritarian regime might put in place are the primary concerns of the investor.
“You can’t go into that business unless you’re like Samsung which is really like a country backing it. A lot of people tried, a lot of people failed … In China, for instance, they will come in and make it very difficult for Apple to sell there. They could theoretically, you know … They’re basically in some senses I would say, perhaps benevolent but a benevolent dictatorship. I don’t know if benevolent is the right word,” Icahn told US cable television network CNBC.
He wasn’t concerned with interference so much as with the country’s “relationship” with Apple, Icahn clarified in response to further questioning.
“The thing that I’m worried about here in China doesn’t affect the whole market. I’m not talking about China’s economic status right now. I’m talking about, could the thing with Apple escalate a little bit? And if that does, what does that mean to Apple’s profits during the interim? What we could talk about is another question and it seems to be taken care of somewhat, China’s economy itself. I’m no expert on it but that’s not what I’m talking about it. I’m talking about the facts that you see. That China is sort of looking at Apple and saying ‘Well can you do this? Should we let you do that? Should we let you do this?’” Icahn said.
Anti-censorship campaigners GreatFire, who told the Guardian “I’d say to them, well, what have you accomplished? What improvements have been made? What has changed since the time you came in and said ‘engagement is better’? How have you improved the human rights situation? How have you improved the internet freedom situation? How have you improved access to information?” are against Apple’s close relationship to the Chinese state which has already brought criticism from activist groups.
He was “still very cautious” on the US stock market and there would be a “day of reckoning” unless there was some sort of fiscal stimulus, Icahn also said.
Acquiring a stake in the company almost three years ago and repeatedly calling the investment a “no brainer”, Icahn had been a huge cheerleader of Apple.
Icahn had argued that shares of the iPhone maker were worth $240 (£164), about 90% more than they had been trading in an open letter to Tim Cook, Apple Chief Executive. At $240 a share, Apple’s market cap would be $1.4tn, Icahn asserted.
China’s economic slowdown and worries about how China could become more prohibitive in doing business triggered his decision to exit his position entirely, said Icah who owned 45.8m Apple shares at the end of last year.
(Adapted from The Guardian)