Tags: Gundlach | Apple | 425 | stock

DoubleLine Capital’s Gundlach: Apple Headed to $425 Next Year

Thursday, 08 Nov 2012 11:16 AM

By Dan Weil

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Apple stock, which hit a record high of $705 in September, will likely drop to $425 next year, as its fundamentals don’t match the market’s hysteria, says Jeff Gundlach, CEO of money manager DoubleLine Capital.

The shares closed at $558 Wednesday. So Gundlach is calling for a 24 percent decline from that level.

“I started shorting Apple in April at about $610,” he tells CNBC. “It just seems to me that it's an over-believed stock. It's one of these things where everywhere you go there's an obsession with it.”

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

The death of CEO Steve Jobs has robbed the company of its innovative prowess, Gundlach says. That shines through in Apple’s newest product, the iPad mini.

“I'm really struck by this mini iPad thing, as if that’s any kind of a product innovation,” he says.

“Once you start just changing the size of your product, you’re not innovating. I wonder if they’re going to come out with the ‘tutti frutti’ mini iPad, which comes in different colors, as if that would be some sort of innovation.”

Apple is having trouble keeping up with demand for its latest iPhone and is losing its dominance in the tablet computer arena.

“Some of the patina has come off the Apple story with regard to the perfect execution they’ve been known for,” Alex Gauna, an analyst at JMP Securities, tells Bloomberg. “Expectations got high for this company, and it’s getting harder for them to meet.”

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

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