Ican Company Targeted by Short Selling Faces U.S. Prosecutor Investigation... Stock Price Plummets Again

Notorious corporate raider and Wall Street activist investor Carl Icahn's 'Icahn Enterprises' is facing a stock price crash crisis following an attack by short sellers and now news of a prosecutor's investigation.

On the afternoon of the 10th (local time) at the New York Stock Exchange, Icahn Enterprises was trading around $31 per share, down more than 16% from the previous close. At one point during the session, the stock price dropped more than 20%, threatening the $30 level.

This is the aftermath of the New York prosecutor's confirmed investigation into Icahn Enterprises, which began immediately after the release of Hindenburg Research's short-selling report. According to documents submitted by Icahn Enterprises to the Securities and Exchange Commission (SEC), the prosecutor requested information from the company on asset valuation, corporate governance, dividends, and due diligence the day after the report was published, on the 3rd.

Icahn Enterprises stated that it is "cooperating with the investigation" but also said, "We do not believe this investigation will have a material impact on our business, financial condition, operations, or cash flow." They also claimed innocence, stating that the prosecutor has not made any allegations against the company or Icahn.

[Image source=Reuters Yonhap News]

The incident was triggered by the report released last week by Hindenburg Research. Earlier, on the 2nd, Hindenburg revealed that Icahn Enterprises had borrowed excessively and was trading at an extremely high premium compared to its net asset value (NAV), disclosing the short-selling position. The report's main point was that Icahn created a de facto 'Ponzi scheme' structure by using funds received from new investors to pay dividends to existing investors. Icahn owns about 84% of Icahn Enterprises' shares.

As a result, the stock price plummeted, and Icahn's personal wealth also evaporated by about $10 billion. According to the Bloomberg Billionaires Index, Icahn's assets are estimated to have dropped from $25 billion at the end of April to $14.4 billion as of this day.

Especially as Icahn criticized Hindenburg's report as "a provocative claim aimed solely at self-interest," Wall Street has seen this as an interesting showdown between a "leading activist investor" and a "leading short-selling specialist investment firm."

In a statement, Icahn emphasized, "Unlike other victims, we will not stand still," and said, "We will take all appropriate measures to protect shareholders and fight back." While acknowledging that the investment division's performance has been poor in recent years, he also countered that the existing portfolio has significant upside potential.

MarketWatch reported, "Icahn has refuted Hindenburg's report, but his company has already lost $6 billion in market capitalization." TheStreet reported, "Icahn Enterprises' stock has already experienced its second double-digit drop this week," adding, "News of the prosecutor's investigation has worsened the bad news for legendary investor Carl Icahn."

On the same day, Icahn Enterprises also disclosed its first-quarter results, including a net loss of $250 million. It also confirmed that the net asset value as of the end of March was $5.6 billion.

This content was produced with the assistance of AI translation services.