NEW YORK, Nov 7 (Reuters) - Apple shares could come under further selling pressure and drop to $425 a share over the next year on lack of innovation, said Jeffrey Gundlach, chief investment officer and chief executive officer of DoubleLine Capital LP.
Gundlach, who recommended betting against Apple in mid-May at the Ira Sohn Investment Conference in New York, told CNBC the company’s stock is “overbelieved” and that its recent debut of the iPad mini is not an innovation.
“The product innovator, as I’ve said over and over again, isn’t there anymore,” Gundlach said in reference to Apple’s late founder Steve Jobs.
Shares of Apple, whose latest quarterly results failed to meet Wall Street’s lofty expectations, has fallen more than 20 percent from a record high of $705.07 in September. Shares slid as much as 4.6 percent on Wednesday to a low of $555.75 before ending the day down 3.8 percent at $558.0019.
Wednesday, Apple shares were under pressure as investors grew more uncertain about its ability to fend off unprecedented competition and untangle a snarled iPhone 5 supply chain.
Gundlach, whose firm oversees more than $45 billion in assets, said that the stock could fall to around $425 a share.
With regard to the benchmark S&P 500 ’s 2 percent decline on Wednesday, Gundlach said that investors may be anticipating the impact of higher taxes on capital gains that U.S. President Barack Obama is expected to implement.
“If you’re going to think about higher tax rates, maybe you want to sell the stocks before the tax rates go up, and I think that may be pressuring stocks in general,” Gundlach said.
Gundlach said that the “fiscal cliff” of tax increases and spending cuts set to begin at the start of next year could be “punted down the road,” but that it could also prove a “monumental” shock to markets if investors doubt its potential impact.
Gundlach also said that his DoubleLine Total Return Bond Fund has roughly 15 percent of its assets in cash and that he expects markets to become more volatile.
“I really am looking for higher volatility in the market as a general theme,” he said.