Bond guru predicts Apple's stock price will fall to $425

Doubleline Capital's Jeffrey Gundlach says the company seems to have lost it ability to innovate, calling out the iPad Mini as an example.

CNET/James Martin

A noted bond investor expects Apple stock to continue its downward slide for a while, saying that the company seems to have lost its ability to innovate.

Jeffrey Gundlach, the CEO and co-founder of investment firm Doubleline Capital, told CNBC today that he expects Apple's stock price, which has declined more than 20 percent since September 19, to slip to as slow as $425. Shares were off 3.38 percent today, falling $22.20 to close at $558.

Gundlach said he has been struck by the "obsession" with Apple's stock. "It seems like every meeting I have, everyone owns it," he said, adding that he started shorting the stock in April at $610. "It's sort of been right, sort of been wrong," he said of the decision, presumably because the stock peaked at $705 in mid-September.

He pointed to the recently released 7.9-inch iPad Mini as an example of what he called a lack of innovation at the company.

"Once you start just changing the size of your products, I really think you're not exactly innovating," he said. "I'm wondering if they're going to start coming out with the tutti-frutti iPad, where it comes out in different colors."

He also noted that investor fears of higher capital gains tax rates may have also played a role in the stock's decline.

Gundlach's prediction is in sobering contrast to a prediction earlier this year that put a $1,000 price target on Apple's shares. In his April prediction, Topeka Capital Markets' Brian White said an "ever-expanding portfolio of innovative products" was fueling "Apple fever."

About the author

Steven Musil is the night news editor at CNET News. Before joining CNET News in 2000, Steven spent 10 years at various Bay Area newspapers.


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