What Happened:

Shares of holding company and industrial conglomerate Icahn Enterprises (NYSE:IEP) jumped 10.2% in the morning session after the company announced the dismissal of a proposed class action lawsuit against Icahn Enterprises (IEP) and its executives. The lawsuit, based on allegations from short-seller Hindenburg Research, was rejected by U.S. District Court Judge K. Michael Moore, who ruled that the claims lacked merit and did not prove any fraudulent activity or material misrepresentation by IEP.

IEP's Chairman, Carl Icahn, added that the SEC investigated the company following Hindenburg's report but found no evidence of fraud or wrongdoing. He clarified that the investigation concluded with a settlement over a minor technical disclosure violation, which was unrelated to any of the claims made by Hindenburg.

Additionally, Icahn addressed media reports suggesting that he plans to sell a significant number of IEP units. He clarifies that these reports are incorrect and that the recent filing with the SEC is part of a routine update.

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What is the market telling us:

Icahn Enterprises’s shares are not very volatile than the market average and over the last year have had only 14 moves greater than 5%. Moves this big are very rare for Icahn Enterprises and that is indicating to us that this news had a significant impact on the market’s perception of the business.

The previous big move we wrote about was 21 days ago, when the stock dropped 7.5% on the news that the company announced an Open Market Sale Agreement with Jefferies to sell up to $400 million of its depositary units. The sale means more depositary units will be issued. This could have a negative impact on its stock price as the newly issued units dilute the ownership of existing shareholders.

Icahn Enterprises is down 35% since the beginning of the year, and at $11.46 per share it is trading 46.8% below its 52-week high of $21.54 from February 2024. Investors who bought $1,000 worth of Icahn Enterprises’s shares 5 years ago would now be looking at an investment worth $169.53.

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