Icahn makes $1.6bn profit on Netflix stake
Published 26/06/2015 | 02:30
Billionaire activist investor Carl Icahn announced yesterday that his firm had sold the remainder of its stake in Netflix, reaping a profit of least $1.6bn in three years.
The billionaire investor paid an average of $58 a share for Netflix stock in 2012, holding around 10pc of the US firm. It closed at $678.61 in New York on Wednesday, a day after announcing a seven-for-one stock split. Mr Icahn would have made over $990m from the sale.
He first cut his stake in October 2013, 14 months after he bought the stock. At that point Netflix was up 457pc, and Mr Icahn made between $700m and $800m selling around half his stake. Mr Icahn also said Apple could be as good an investment as Netflix. "Sold the last of our [Netflix] today," Icahn tweeted yesterday.
"Believed [Apple] currently represents same opportunity we stated [Netflix] offered several years ago." The investor holds about 53m Apple shares, worth about $6.8bn, according to Bloomberg data.
Apple had its own seven-for-one split last year and has gained 41pc since. Mr Icahn still thinks the shares are undervalued, saying in an open letter to Apple chief executive Tim Cook on May 18 that Apple shares should be trading at $240, almost twice their current value.
Netflix's market capitalisation has soared eightfold to more than $40bn since 2012 as the company expanded its pioneering web-based TV service to more than 50 countries and signed up more than 62 million subscribers worldwide.
Mr Icahn's son, Brett, who had encouraged his father to buy shares in the company, advised him against selling his stake early. He said the shares were significantly undervalued when his father cut his stake in half. By January of this year Mr Icahn seemed to regret not listening to his son.
In a CNBC interview he said: "What I was worried about and conservative about Netflix - and obviously I wished I hadn't been as conservative - was net neutrality, which has seemed to go away."