2/21/2024: Nvidia Earnings Beat Expectations
$NVDA stock go bananas
Nvidia reported Q4 earnings after market close today. Revenue was $22.1B vs. $20.62B expected. Adjusted EPS was $5.16 vs. $4.64 expected. The company also said it expected revenue to be $24B this quarter vs. $22.17B expected by the analysts. NVDA 0.00%↑ stocks soared 8% after the report.
There has been a lot of volatility on the Nvidia stock. Last week NVDA 0.00%↑ was trading at ATH of $746 per share. The stock went down to $674 right before the earnings and now it’s back at ~$720 after the report. WSJ reported that many options traders are betting that Nvidia will make big moves after the earnings. In fact, Nvidia is the most actively traded options among the Russell 3000 companies and $500B worth of options exchanged hands last week. Options market makers usually have to buy and sell the underlying stocks to hedge their positions. In the case of Nvidia, a lot of the stock buying is probably market makers buying after they sell calls to option yolo-ers. Nvidia has had impressive growth from the AI boom but these market maker buyers of Nvidia stocks are not concerned about the fundamentals, which tends to distort the stock prices. The stock could keep going higher or it could become the next ZM 0.00%↑ or TDOC 0.00%↑. Nobody knows what’s going to happen. But at current price levels, investors shall be more cautious and perhaps take some chips off the table.
Straddle options where priced at 11% into close.
If the stock only moves 7-8% on these earnings the market makers are making $$$s on their option sales.
Solid earnings for sure.
If Q1 2025 guide of 24B and 75% GM is annualized they are trading at FCF of ~30. Cheap compared to other faang.
I belive their revenue and margins both get cut in half some point over the next two years. Putting it at around a 120x FCF multiple. At one point we get there and if q4/Q1 is the top, TBD.