Let’s break down why and how IEP’s stock price collapsed ~90%, despite Carl Icahn controlling 89% of shares:
The Fall of IEP: What Really Happened
1. Carl Icahn Controls ≈ 89% of SharesCarl Icahn has majority ownership and control over IEP — his publicly traded holding company.
However, most of those shares are locked up: not traded, not sold. This means the actual float (shares available for trading) is very thin — low liquidity.
2. Short Sellers Targeted IEPIn May 2023, Hindenburg Research, a well-known short-selling firm, released a damning report on IEP.
Accused IEP of being overleveraged and overvalued.
Highlighted that its dividend was unsustainably high and possibly paid out using new investor money, raising concerns similar to a Ponzi-like structure.
The report spooked the market, causing retail and institutional sentiment to crater.
3. The Stock Collapsed — Despite Low FloatEven though Icahn wasn’t selling, IEP’s thin float made it extremely vulnerable to pressure:
Short sellers could borrow even a small number of shares to short aggressively.
Low liquidity meant even a modest volume of selling could drive the price down sharply.
This triggered forced selling, margin calls, and fear-based exits from other holders (e.g., retail or ETFs).
So, even with only 5–10% of the float in play, hedge funds were able to dominate price discovery.
Why Didn’t Icahn Stop It?He Can’t Easily Buy Back Float
While he owns the majority, buying back float to prop up the price would:
Look like manipulation
Drain capital from the company
Possibly violate disclosure rules
The Market Prices Based on Free Float, Not Just Ownership
A stock's price is based on what the marginal buyer/seller is willing to pay. Icahn’s holdings are not in play, so they don’t defend the price.
Dividend Sustainability in Question
IEP was paying a very high dividend, but many investors became convinced it wasn’t sustainable, especially with a falling stock price and high debt.
Final Thought
IEP shows that ownership control doesn't shield a stock from market sentiment, short attacks, or structural weaknesses. It also reinforces how the real price-setters are the traders active in the small, liquid portion of the market — not the long-term holders who sit quietly on most shares.
Would you like a breakdown of Hindenburg’s specific claims or a technical analysis of IEP’s price collapse?
