Icahn has sold his shares in the company because of concerns over China’s influence on its stock price

Carl Icahn, the billionaire activist investor who has long been one of the most prominent voices declaring the company to be undervalued, says he has sold his entire stake in the technology firm, citing the risk of China’s influence on the stock.

After years of high growth, reaching triple-digit percentage points in 2015, Apple now sells more in China than it does in the whole of Europe. But sales in the country are now shrinking, with revenue dropping 26% year-on-year in the company’s latest quarterly earnings.

Icahn’s concerns aren’t related to the China slowdown, however. Instead, the investor is concerned with the barriers to trade that China’s authoritarian regime might put in place.

“You can’t go into that business unless you’re like Samsung which is really like a country backing it,” Icahn told US cable television network CNBC. “A lot of people tried, a lot of people failed … In China, for instance, they will come in and make it very difficult for Apple to sell there. They could theoretically, you know … They’re basically in some senses I would say, perhaps benevolent but a benevolent dictatorship. I don’t know if benevolent is the right word.”

In response to further questioning, Icahn clarified that he wasn’t concerned with interference so much as with the country’s “relationship” with Apple. “The thing that I’m worried about here in China doesn’t affect the whole market. I’m not talking about China’s economic status right now. I’m talking about, could the thing with Apple escalate a little bit? And if that does, what does that mean to Apple’s profits during the interim?

“What we could talk about is another question and it seems to be taken care of somewhat, China’s economy itself. I’m no expert on it but that’s not what I’m talking about it. I’m talking about the facts that you see. That China is sort of looking at Apple and saying ‘Well can you do this? Should we let you do that? Should we let you do this?’”

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Apple’s close relationship to the Chinese state has already brought criticism from activist groups such as anti-censorship campaigners GreatFire, who told the Guardian “I’d say to them, well, what have you accomplished? What improvements have been made? What has changed since the time you came in and said ‘engagement is better’? How have you improved the human rights situation? How have you improved the internet freedom situation? How have you improved access to information?”

Icahn also said he was “still very cautious” on the US stock market and there would be a “day of reckoning” unless there was some sort of fiscal stimulus.

Icahn had been a huge cheerleader of Apple, acquiring a stake in the company almost three years ago, repeatedly calling the investment a “no brainer.”

In an open letter to Apple chief executive Tim Cook in May 2015, Icahn had argued that shares of the iPhone maker were worth $240 (£164), about 90% more than they had been trading. At $240 a share, Apple’s market cap would be $1.4tn, Icahn asserted.

But Icahn, who owned 45.8m Apple shares at the end of last year, said China’s economic slowdown and worries about how China could become more prohibitive in doing business triggered his decision to exit his position entirely.

“We no longer have a position in Apple,” he said. “Tim Cook did a great job. I called him this morning to tell him that and he was a little sorry, obviously. But I told him it’s a great company.

“In Apple today as opposed to six months or a year ago, in this one, there’s no need for activism because I think they have a great management. But you worry a little bit, maybe more than a little, about China’s attitude.”

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The Chinese government could “come in and make it very difficult for Apple to sell there ... you can do pretty much what you want there”, Icahn said. Earlier this month, China shut down Apple’s iTunes movies and iBooks stores within the country, following Beijing’s introduction of regulations in March imposing strict curbs on online publishing, particularly for foreign firms.

Asked when he might get back in, Icahn replied: “I don’t think it’s the price point. I think it’s my opinion about what is happening with China. I think the stock is very cheap on a multiple basis. China could be a shadow for it, and we have to look at that.”

Icahn, who suggested that he made roughly $2bn on his shares in the company, said he was in Apple for about three years and “if you bought the stock then, you got a 48% to 50% total return. We obviously made a great deal of money, but it was no surprise that we got out of some in February.”

Apple shares came under further selling pressure during Icahn’s television interview, as did the Dow Jones industrials with Apple closing down more than 3% at $94.83. The Dow ended down by 210 points.

Apple on Tuesday posted its first decline in iPhone sales as well as its first revenue drop in 13 years. The company’s sales fell by more than a quarter in China, its most important market after the US, and it forecast another disappointing quarter for global revenues.

Apple shares have now declined more than 10% this week.