“Extortionary Threats by the Government”: Intel Stock (NASDAQ:INTC) Plunges on New Allegations

Did chip stock Intel INTC -5.77% ▼ agree to let the United States buy nearly 10% of its stock to avoid being called out on social media? That is what a new lawsuit alleges, and shareholders seem terribly unhappy about this notion, sending Intel shares careening down over 5% in Thursday afternoon’s trading.

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Reports noted that an Intel shareholder, Richard Paisner, filed suit against the company, alleging that Intel only sold 10% of the company to the government to avoid getting dragged on social media by the Trump administration. The lawsuit further declares the sale an “…unlawful contract that gives the US government $11 billion worth of Intel stock for no meaningful consideration in response to extortionary threats by the government.”

I may not be a lawyer, but it would seem that $11 billion is “meaningful consideration” enough. At any rate, the suit continues, alleging that Intel’s leadership was more concerned with “…protecting their personal reputations, being free from attacks by President Trump and his supporters on social media and elsewhere…” than with protecting Intel shareholders. The suit further alleged that the stock purchase deal was struck as a way to allow current CEO Lip-Bu Tan to keep his job. Intel, meanwhile, did not comment on the suit.

Not Running From RAN

Meanwhile, anyone who thought that Intel might have a plan in place to sell off its radio access network (RAN) business will be disappointed. Intel has no plan to sell off the networks business, reports note, as Intel processors are up to the task of handling the confluence of RAN and artificial intelligence (AI).

In fact, Intel looks for its Granite Rapids processor to do a particularly good job with the RAN market. The recent partnership efforts with Ericsson ERIC -0.22% ▼ were again referenced, and Intel’s move to be a useful part of the 6G market should have sat better with investors than it seems to have in today’s trading.

Is Intel a Buy, Hold or Sell?

Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on seven Buys, 22 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 102.45% rally in its share price over the past year, the average INTC price target of $47.97 per share implies 5.5% upside potential.

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