Billionaire investor Carl Icahn missed out on a $40 billion gain by selling Netflix and Apple stock

Carl icahn
Carl Icahn. REUTERS/Jeff Zelevansky
  • Carl Icahn missed out on more than $US40 ($AU55) billion of gains on Apple and Netflix stock.
  • The investor bet big on Netflix in 2012 and Apple in 2013, but cashed out a few years later.
  • Icahn described both wagers as “no-brainers” but left huge amounts of money on the table.
  • See more stories on Insider’s business page.

Carl Icahn sold his massive stakes in Netflix and Apple more than five years ago, missing out on over $US40 ($AU55) billion in prospective gains.

The billionaire investor and Icahn Enterprises chairman first bought Netflix stock in the third quarter of 2012, and quickly amassed as many as 38.5 million shares, adjusted for the video-streaming platform’s 7-for-1 stock split in 2015.

“Netflix was a no-brainer when we first went into it,” Icahn told CNBC in June 2015, citing the company’s huge war chest.

Icahn’s roughly 9% stake in Netflix rose in value to over $US1.7 ($AU2) billion by late 2013. However, the investor steadily reduced it over the next few quarters, and exited the holding entirely in the second quarter of 2015.

“As a hardened veteran of seven bear markets, I have learned that when you are lucky and/or smart enough to have made a total return of 457% in only 14 months, it is time to take some of the chips off the table,” he explained in a Securities and Exchange Commission filing at the time.

Still, he might regret the move today. Netflix’s stock price has skyrocketed more than 10-fold since Icahn’s exit, and closed at a record $US613 ($AU844) last Friday. At its peak, the investor’s stake would be worth about $US24 ($AU33) billion today.

Icahn made a similar bet on Apple. He first invested in the iPhone maker in the third quarter of 2013, and built his stake to 211 million shares by mid-2014, adjusted for the 4-for-1 stock split last year. The position grew in value to about $US6.6 ($AU9) billion by mid-2015.

The investor tweeted that Apple stock was “extremely undervalued” in August 2013, and he told The Wall Street Journal the bet was a “no-brainer” given Apple’s rich potential to repurchase shares.

Regardless, Icahn exited the position in early 2016, citing concerns about demand in China. Apple’s stock price has surged more than five-fold since then, meaning if the investor hadn’t sold, he could be sitting on a stake worth up to $US30 ($AU41) billion today.

It’s worth emphasizing that Icahn made a few billion dollars of profit on his Netflix and Apple bets. However, his combined stakes in the two companies would be worth more than $US50 ($AU69) billion today if he hadn’t cashed out. That includes well over $US40 ($AU55) billion in unrealized gains, all other things being equal.

Icahn didn’t immediately respond to a request for comment from Insider.

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