IEP’s Slashed Quarterly Dividend Causes Carl Icahn’s Company Stock to Plummet by 23%

Shares of Icahn Enterprises, the conglomerate owned by Carl Icahn, experienced a significant decline in value on Friday. This decline came after the company cut its quarterly dividend in half, following the release of a critical report by short seller Hindenburg Research.

As per the announcement by Icahn Enterprises (IEP), the company has issued a $1 per depositary unit distribution, which translates to a 12% annualized yield. This is a reduction from the previous quarter’s dividend of $2. In response to this news, the stock plummeted by a staggering 23.2%.

IEP has witnessed a series of ups and downs ever since Nathan Anderson-led short seller Hindenburg Research publicly accused the company of having “inflated” asset valuations among other allegations. In the second quarter, IEP, a holding company with investments in various sectors including energy, automotive, and real estate, experienced a massive 44% drop in stock value. Year to date, the stock has fallen by 50.5%.

Hindenburg Research took issue with IEP’s high dividend yield, claiming it was not supported by the company’s cash flow and investment performance.

In response, 87-year-old investor Carl Icahn stated in a press release, “The payment of future distributions will be determined quarterly by the board of directors, taking into account current economic conditions, business performance, and other relevant factors. We will not allow the misleading Hindenburg report to interfere with this practice.”

In its second-quarter report, Icahn Enterprises recorded a net loss of $269 million, doubling the loss of $128 million from the same period last year. Icahn attributed this disappointing quarter to the impact of short selling on his controlled companies and investments.

Regarding the allegations made by Hindenburg, federal investigators have initiated inquiries into IEP’s corporate governance, capitalization, securities offerings, dividends, valuation, marketing materials, due diligence, and other relevant materials.

Carl Icahn, renowned for his corporate raiding tactics, rose to fame in the 1980s after successfully executing a hostile takeover of Trans World Airlines (TWA) and subsequently stripping the company of its assets. Recently, this billionaire investor has been engaged in activist investing with companies like McDonald’s and biotech firm Illumina.