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Cloudera Stock Surges on News of Icahn’s Stake

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Aug. 2 2019, Updated 3:34 p.m. ET

Yesterday, Carl Icahn revealed his 12.6% stake in data analytics company Cloudera (CLDR), causing its shares to jump. According to Reuters, he also said that he’d seek seats on the company’s board. Icahn believes that Cloudera stock is undervalued, and he’s said he’ll aim to talk to its management about increasing shareholder value.

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Icahn thinks Cloudera is undervalued

In an SEC filing, Icahn Enterprises (IEP) mentioned that it intends to “seek to speak with representatives of the Issuer’s board of directors and management to discuss enhancing shareholder value and potentially seeking board representation.”

Cloudera stock’s plunge in 2019

Cloudera provides subscription and software-as-a-service hybrid cloud-enabled data management. It went public in 2017 at $15 per share. Cloudera’s stock price just before the news of Icahn’s investment was trading around $6.0. This implies a decline of 150% from its initial price. As of July 31, Cloudera stock was down 45.9% YTD (year-to-date). Most of the stock’s decline came in June, after it reduced its full-year guidance during its earnings release. Moreover, its CEO decided to step down, which was considered another blow. Cloudera also handled its merger with Hortonworks poorly, which ultimately led it to downgrade its guidance. Following these announcements, many analysts downgraded the stock, worsening the investor sentiment even further.

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Cloudera’s underperformance

In contrast to the 46% plunge in Cloudera stock, the iShares Expanded Tech-Software Sector ETF (IGV) has rallied 27% YTD. The tech-heavy Nasdaq Composite Index has booked a gain of 23.3% in the same period.

On the news of Icahn’s stake and his plans to increase shareholder value, CLDR surged 12.6% in after-hours trading yesterday. The stock was up 6.1% at 10:30 AM ET today.

Icahn’s push for changes

Icahn is known for turning companies’ fortunes around by building an investor stake. He’s recently been fighting with Occidental Petroleum (OXY) to get four seats on its board to prevent it from carrying out expensive acquisitions (like its deal with Anadarko Petroleum) in the future. He’s also trying to provide shareholders with a say in such matters.

Icahn has also been pushing for changes—or even a sale—at Caesars Entertainment (CZR) for a long time. In June, Eldorado Resorts agreed to merge with Caesars Entertainment. Previously, Icahn pressured Apple to make buybacks and issue dividends. In 2015, Icahn took a stake in Freeport-McMoRan (FCX) and got his nominees appointed to Freeport’s board. This development eventually led the company to sell off its energy assets as well as some copper assets to repay its huge debt pile.

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