Icahn Enterprises (IEP) saw its share price fall around 25% Friday after the company cut its quarterly dividend in half, prompting cries of victory from short seller Hindenburg Research.
Anouncing its second-quarter financial results, IEP declared a dividend distribution of $1 per depositary unit, equating to a 12% annualized yield, down from the firm’s previous payout of $2 per unit.
Carl Icahn, the founder and largest shareholder of IEP, has long touted the strength of the company’s dividend both to its shareholders and when launching activist campaigns against other public companies.
The dividend cut follows a May 2 short-selling report issued by Hindenburg Research, which had already resulted in the conglomerate’s market value falling by more than 30%.
The short seller was quick to claim victory over today’s news, noting in a tweet that its report had predicted that “Icahn Enterprises will eventually cut or eliminate its dividend entirely, barring a miracle turnaround in investment performance.”
The report alleged that IEP had been inflating asset valuations and operating “ponzi-like economic structures.” The report also accused Carl Icahn of using funds from new investors to pay dividends to existing ones. Both IEP and Icahn have vehemently denied these allegations.
The second-quarter results indicate that Icahn Enterprises continues to struggle financially, with the company reported a net loss of $269 million, more than double the year-earlier loss of $128 million.
In a press release accompanying the results, Carl Icahn attributing part of the second-quarter struggles to the impact of short-selling on companies under his control or investment. He specifically pointed to the Hindenburg report, which he deemed as “misleading and self-serving.” Icahn expressed determination to continue distributing dividends despite the hindrances presented by the report.
IEP units we trading at $25.01 apiece, down 23% in afternoon trade Friday.