Activist investor Carl Icahn is pressing Apple to implement a $150 billion share buyback to propel the stock higher, he said in a letter released on Thursday.
In the message to Apple Chief Executive Tim Cook, Icahn said the company was dramatically undervalued and that the buyback strategy could boost the share price from its current level of around $530 to $1,250 within three years.
Icahn released the letter just two days after Apple unveiled its latest model iPads which are bound to be a huge hit over the holiday season.
The 77-year-old is famous for buying stakes in companies and pressuring them to take action to raise the share price or return cash to investors via increased dividends.
He recently boosted his share in Apple by 22 per cent to 4.73 million shares, which are worth about $2.5 billion and represent a 0.5 per cent stake in the company.
The company is worth some $450 billion, making it the most valuable publicly-traded company in the world.
Apple already has a $60 billion buyback program, but in his letter Icahn said that “is simply not large enough given that Apple currently holds $147 billion of cash on its balance sheet.” He said that Apple could borrow the entire sum needed for the buyback at 3 per cent and increase earnings per share by 33 per cent, he said.
Apple’s stock price has struggled over the last year as investors fret about growing competition from the likes of Samsung and Google and the absence of new market defining products.