Shares of Apple (NASDAQ:AAPL) fell by 5.4 percent on Wednesday after the Cupertino-based company’s latest entries into the smartphone market failed to impress investors. However, billionaire investor Carl Icahn remained bullish on Apple as he disclosed to CNBC that he added “quite a bit” of Apple stock to his already significant position because, “It’s just extremely cheap.”
Icahn sent Apple stock up about a month ago when he revealed via Twitter that he had a “large position” in the iPhone maker. Despite the post-media event slide in the stock price, Icahn recently told CNBC that his investment in Apple is a “no brainer.”
According to his Twitter announcement last month, Icahn believes that Apple is “extremely undervalued.” The activist investor told Reuters that he thinks Apple has the potential to return to the $700 level that it reached last September if it funds a $150 billion buyback with funds borrowed at 3 percent. “If Apple does this now and earnings increase at only 10 percent, the stock — even keeping the same multiple currently — should trade at $700 a share,” noted Icahn.
Most Apple observers already had a general idea about Apple’s next-generation iPhones even before the September 10 media event, thanks to multiple supply chain leaks. However, Apple’s recent stock price decline appeared to be a market reaction to the higher-than-expected price for the lower-cost iPhone 5C.
Many investors were expecting the unsubsidized Phone 5C to cost approximately $400 or less and would help boost Apple’s share of emerging markets such as China. However, Apple revealed on Tuesday that the plastic iPhone 5C will actually sell for approximately $730 in China, reports Reuters.
Despite this, Icahn remains confident in Apple’s ability to grow its revenue. “I look at it from the big picture. I just look at what they’re doing. They’re one of the best brands. They are building revenue,” Icahn told CNBC on Wednesday.
Here’s how Apple has traded over the past five days.
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