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Is Apple Music The Catalyst Icahn Was Looking For? Maybe Not; It’s A “Big Nothing” Says O’Leary

Carl Icahn of Icahn Capital has been loudly beating the Apple Inc. (NASDAQ:AAPL) war drum for some time now, regaling us with a pleasing ode of Apple’s majestic value and competition-crushing might, even in highly competitive industries in which it has yet to strum a note (automobiles). The music Apple was playing at WWDC was not nearly as rousing however; the music, Apple Music to be exact, is in fact downright snooze-worthy according to Shark Tank star Kevin O’Leary, a dull sonnet more likely to cure insomnia than it is capable of affecting Apple’s bottom line.

Carl Icahn - Icahn Capital Lp

“I look at this as an investor and ask myself: ‘With this today with what I know […] does this change my mind about leaving the stock or buying more of it?’ To me, the whole thing is a giant nothing burger. Who cares? Even if they owned all the streaming companies with all the features, it wouldn’t make a difference to their income statement,” O’Leary said during a segment on CNBC.

Not that O’Leary was criticizing the new service itself per se, though it will have a lot of catching up to do, with Spotify touting its 20 million lead in paid users today, along with its 75 million lead in overall users. The Swedish company also closed a funding round yesterday that hauled in $526 million for its impending battle with Apple, which owns one of the most profitable businesses ever. O’Leary even admits that Apple Music could be effective at keeping people within that profitable Apple Inc. (NASDAQ:AAPL) ecosystem, if nothing else. However, he sees very little to like about the music industry in general from an investor’s point of view, and believes there is no money to be made slinging tunes to an eager, headphone-wearing audience.

“What I’m learning out of all of this as I dig and peel the onion is what a crappy business music is. Every part of it sucks. You can’t make any money. It’s not that big a business at all. Frankly, to get a whole bunch of investors like me focused on this, I don’t know why,” O’Leary said.

Apple Inc. (NASDAQ:AAPL) unveiled Apple Music on Monday at the Worldwide Developers Conference (WWDC) 2015, announcing that the service would cost $10 per month and will be available in over 100 countries when it launches at the end of June. With the service’s launch also comes Beats 1, a live radio station which will also be available through Apple Music for users to listen to content on, apart from the massive Apple Music library.

Icahn has pointed towards Apple TV as being one of the upcoming product segments that Apple is poised to dominate, yet the service was notably absent from WWDC as Apple continues to work out details and get content rights. The service will reportedly pack 25 major channels in addition to on-demand services. Yet while former Apple CEO John Sculley also believes the service will be a true gamechanger, it remains to be seen how investors as a whole will react to the television streaming service, which itself will face an uphill battle against the likes of Sony’s PlayStation Vue (which coincidentally, was made available for the iPad today).

Carl Icahn
Icahn Capital LP

Icahn also foresees a future where Apple takes control of the automobile industry, though one can hardly take such speculation with anything but a grain of salt. Either way, Icahn believes that Apple is worth over $200 per share and a $1 trillion market cap today, though Apple Music does not appear to be the catalyst that will make it happen: Apple’s shares are up only marginally so far this week.

Billionaire Stephen Mandel’s Lone Pine Capital increased its stake in Apple Inc. (NASDAQ:AAPL) by 214% during the first quarter of the year to about 6.84 million shares, while billionaire David Einhorn trimmed his stake in the tech giant by 14% to 7.44 million shares. Overall, Apple fell out of the top five most popular tech stocks among billionaires by the end of last quarter, in addition to losing its top spot overall among the hedge funds in our database.

Disclosure: None

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