Apple Inc (AAPL): Jeff Gundlach Sees a Return to $425

Apple Inc. (NASDAQ:AAPL), reflecting the dive in the overall market Wednesday, has been flirting with “bear market” territory on the stock, finishing a 20-percent drop in the price since mid-September. But how low can it go, even with several new  devices in the market for the holiday season – which is usually its best sales season?

Apple Inc. (NASDAQ:AAPL)

Would you believe $530 or less, just a short time after the Apple Inc (NASDAQ:AAPL) stock reached an all-time high of $705? For Darren Chervitz of Jacob Internet Fund, that would seem to be a good play. But for Jeff Gundlach, CEO of Doubleline Capital, that might even be overbought – he projects the stock going as low as $425 next year, as he spoke on Fast Money on CNBC.

Why such pessimism on such a large tech brand? Gundlach’s thesis is pretty simple: It has to do with innovation, or a lack of it.

“It seems to me with Apple that it’s an overbelieved stock,” Gundlach said. “Everywhere you go, there seems to be an obsession with it. The product innovator, as I’ve said over and over again (Steve Jobs), isn’t there anymore. I’m really struck with this iPad Mini thing. Once you start changing the size of your products, I really think you’red not exactly innovating.”

Gundlach went on to add that some aspects of this Apple Inc (NASDAQ:AAPL) stock selloff could be attributed to impending increases in capital-gains tax increases that are expected in January when the current tax rates expire. However, he also said, “This stock really started to go pretty powerfully vertical at about $425, and I think that when a stock goes vertical, then gets tired and peaks out, (it) usually goes back to the point where it went vertical.”

Chervitz certainly isn’t surprised by the movement, and sees the bottom coming pretty soon – a little sooner than Gerlach, perhaps.

“We’ve been through situations like this with Apple plenty of times in the past,” Chervitz said of the drop while on the “Halftime Report” on CNBC’s Fast Money program. “We’re not short-term, fast-money guys. If we were, we’d probably be … out of the name in early October. I don’t think you’ll see much support until $530 or $500. At that point, I think $500 to $530 would absolutely be a point where I would look at it.”

Might Apple Inc (NASDAQ:AAPL) consider stemming the tide of the drop by initiating a buyback? Chervitz was asked this during the segment, referring to the company’s $100 billion in cash on hand. “Clearly they have the resources,” Chervitz said. “Its is trading at less than 10 times next year’s earnings, and for a company as strongly positioned as Apple is, growing still 20 percent next year, I think it would be a good use of cash. I’m not a huge fun of buybacks, but at this level I wouldn’t be surprised to see on news on that front.”

If you’re considering investing in Apple Inc (NASDAQ:AAPL) – or if you’re already investing – how would you see the stock? What are your thoughts? Do you think investors like billionaire fund manager David Einhorn of Greenlight Capital agree with Chervitz or Gerlach? Would you expect hedge funds to seell positions, or hold them and buy more at the bottom? Give us your thoughts below.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!