jcrash

Nvidia Shares Swoon on Margin Concerns

It's always something.

I'd have to say that given the 40% selloff that has already taken place, all these downgrades are a little late to the party and make me hold my nose.

13 quarters of rising margins - uh oh, a small decrease - lets cut it in half. Who is the dude forecasting earnings of $1.41? Is he on drugs? They will get that in 3 quarters, easily. Notice how after the last quarter earnings estimates went UP by some 20% for this quarter, those numbers were exceeded and now they will in fact need to raise estimates for next quarter which sit at $.41/share. NVDA already said "less than seasonal" decrease for this quarter, and the estimates are for worse. So, once again the analysts will raise estimates and lower price targets.

Something stinks pretty badly here. The call action is very telling. Someone is selling thousands of calls at the money. Then they hold it down. Their averaging buy price is lower than the lows thanks to this. So far, less have been sold for next month than last month at this time, so we shall see.

$1.75 easily this year given they only need to average $.41 per quarter for the rest of the year to make that number. The analyst saying $1.41 is thus saying they only will make $.31 per quarter. Yeah, right...increasing revenues at 20% or more will do that every time.

Yes, they said on the call to expect higher operating expenses - I know, but they also said the margin related issue was a one time issue.

This stock is simply reflecting its beta - which is 3.0. Expect the traders to play it all over the place, but in a year or two, you are looking at a double from these depressed levels. Simply slapping a P/E of 15 on it with next years earnings easily at $2.25 gives you an easy 30% return.

I'm long, and I'll get longer should it sell off into the teens.