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Could The Financial Markets Erroneously Price Apple Inc. (AAPL)’s Stock By As Much As 20% Below?

Apple Inc. (NASDAQ:AAPL) bypassed the $100 spot recently in its almost 2% price increase for the last two days. The value per share is currently close to $101.7 and is promising to rise even further consequence to Carl Icahn addressing the management of the company in a letter suggesting that the tech titan should follow a repurchasing strategy while the markets undervalue Apple Inc. (NASDAQ:AAPL), according to CNBC.

Carl Icahn - Icahn Capital Lp

“There’s nothing out there on the horizon that’s nearly as profitable as the iPhone and I think this company has to reinvest for the future and have new products. Carl used to be admired and respected and he’s got a great track record, but I’ll let the management do the heavy lifting,” said Leon Cooperman, Omega Advisors Chairman and CEO.

As we can conclude there are two main things to be expected if the tender offer proposed by the activist investor goes through. First, the share price will rise as the demand for Apple Inc. (NASDAQ:AAPL) stock will increase throughout this process. The net effect remains unknown as there weren’t given any clear specifications regarding the amount and the exact time when it will take place. Second, which is clearly specified in the letter, is the fact that the remaining shareholders will be able to benefit even more from the upcoming growth in valuation Apple Inc. (NASDAQ:AAPL) is expected to undergo.

“Given the earnings growth we forecast, we continue to think that the market misunderstands and dramatically undervalues Apple and the excess liquidity that the company continues to hold on its balance sheet,” Carl Icahn was cited as saying.

Probably, Apple Inc. (NASDAQ:AAPL)’s current liquidity could have been better spent than on a repurchase initiative, but that’s only from a theoretical point of view as there’s no need to launch new products and the tech colossus has about $133 billion in cash equivalents, which is more than enough to allow it perform its core activities and buy back some stock.

Disclosure: none

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