On Friday, Carl Icahn Enterprises (NASDAQ:IEP) experienced a historic 24% drop, its most severe single-day decline, following the announcement of a 50% cut in its quarterly distribution from $2 to $1.
Owned by legendary investor Carl Icahn, the firm has seen a staggering 50% drop since Hindenburg Research published a short report in early May. This plunge has wiped nearly $10 billion off the company’s market value, dragging Icahn’s net worth down to $7.8 billion, the lowest it’s been since the Bloomberg Billionaires Index started tracking it 11 years ago.
In May, Hindenburg Research alleged that Icahn’s investment vehicle, IEP, had inflated asset values. The report also revealed that Icahn had borrowed from his own company. Icahn attributed the second quarter’s adverse effects, in part, to the impact of short selling of companies in which IEP has stakes, blaming the “misleading and self-serving” Hindenburg report.
On Friday, Hindenburg said on Twitter that Icahn Enterprises had reported further investment losses and reduced its dividend. Hindenburg had predicted this outcome in May, stating, “Icahn Enterprises will eventually cut or eliminate its dividend entirely, barring a miracle turnaround in investment performance.”
On May 2nd, we predicted that “Icahn Enterprises will eventually cut or eliminate its dividend entirely, barring a miracle turnaround in investment performance.”
Today, $IEP reported further investment losses and slashed its dividend by 50%.
We remain short. https://t.co/uacxg1yEBG
— Hindenburg Research (@HindenburgRes) August 4, 2023
Last month, Icahn consolidated all his debts under a new three-year term loan, backed by 320 million IEP depositary units and $2 billion of interest in private investment funds managed by Icahn Enterprises. A principal repayment of $500 million is due on or before Sept. 1, with quarterly payments of $87.5 million starting in September 2024 and a final sum of $2.5 billion at the end of the term.
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