Billionaire business magnate Carl Icahn, whose investment decisions can influence the stock market, said Thursday that he dumped what was left of his nearly 1% stake in Apple Inc. on fears that Chinese authorities would bully the iPhone maker.
Shares of Apple sank after his announcement in a live interview on CNBC. The shares have lost 9% of their value since Apple revealed Tuesday troubling first-quarter financial results, including a 26% sales drop in Greater China compared with the same period last year.
“China obviously could be a shadow for it, and we have to look at that,” Icahn said of Apple.
Chinese consumers once infatuated with the iPhone as a status symbol of new wealth have increasingly turned to more affordable smartphone alternatives. And regulators in China recently took aggressive action against Apple, blocking access to the company’s online stores for digital books and movies. It’s unclear when access might be restored.
Financial analysts say it’s too early to worry about the falling sales in Apple’s largest market after U.S. Apple executives said Tuesday that they remained committed to China and that its economy is steadier than many believe. The company also manufacturers in China.
But the capricious nature of China’s government was too much for Icahn to stomach, especially after an unexpected tumble in oil prices ravaged his energy industry bets last year.
“I worry a little bit that a tsunami could hit it,” he told CNBC.
Icahn bought nearly 53 million Apple shares about three years ago. Last May, he said the company should be worth almost double, or more than $1 trillion. But months later, he sold 7 million shares before putting the rest back on the market this year.
He said he made $2 billion off the trading and estimated that people who bought in shortly after he initially did have generated a 50% return.
Icahn called Apple Chief Executive Tim Cook on Thursday morning to disclose the sell-off. Cook was sorry to hear it, he said.
But Icahn noted he still believes that Apple shares are undervalued and that he would hop back in if conditions in China were more settled.
“I would tell you if I thought something is wrong” with the company and management, he said. “I got out ... because I’m worried about China and have this huge profit.”
Shares shot up 5% the day Icahn first announced a “large position” in Apple. They were down 3% on Thursday, or $3.01, to $94.81.