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Nvidia Just Can't Grab a Break. Revenues up, Profit Nearly Doubles... and Stock Down 20% :
Ongoing Bitcoin woes left the channel holding all the cards, and that's not a good thing
Nvidia has turned in growth in revenue and profit, but has been punished for missing its guidance in the third quarter of its fiscal 2019, all amid a continuing sharp drop in demand from crypto-currency miners.
Its stock fell as much as 20 per cent after it reported on Thursday:
- Revenue of $3.18bn, up 21 per cent year-on-year, during the three months to the end of October.
- Net income of $1.23bn in that quarter, up 47 per cent year-on-year.
- GAAP diluted earnings per share of $1.97, up 48 per cent year-on-year.
Nvidia missed forecasts because of a decline in what was formerly one of its most important growth markets – cryptocurrency mining rigs. With Bitcoin and Ethereum declining in value, big mining rigs are less economic.
As CEO and cofounder Jensen Huang said in the company's media announcement: "Our near-term results reflect excess channel inventory post the crypto-currency boom, which will be corrected."
CFO Colette Kress told analysts on a conference call that GaaP gross margins grew 90 basis points year-on-year, reflecting "our continued shift towards higher-value platforms", but the crypto collapse meant Nvidia suffered a "$57mn charge for prior architecture and chips."
[...] The company's announcement noted that in the last year, there was "a 48 per cent jump over last year in the number of systems using NVIDIA GPU accelerators, climbing to 127, including the fastest in the world, No 1 in the US, No 1 in Europe and No 1 in Japan".
Was nice while it lasted. Now that Bitcoin has dropped from $19,500 to $5,500 over the past 11 months and other cryptocurrencies like Ethereum and Litecoin have seen drops of 80-90%, a one-time bright spot in NVIDIA's revenue stream has passed. How much of an opportunity is this for AMD?
(Score: 1, Insightful) by Anonymous Coward on Friday November 16 2018, @06:25PM (5 children)
The stock market is a derivative (in the mathematical sense) of a mixture of a) past expectations that a bunch of gambling money-grabbers had for then future developments which have just now become current and b) current expectations that a mostly overlapping set of gambling money-grabbers now has for the actual future.
As you'd expect from that description, connections to the real world are tenuous at best. How anybody can treat this shit different from a Las Vegas slot machine is beyond me.
But hey, *real* stock traders deal in derivatives (in the financial sense) of derivatives of derivatives of these values, applying the above pattern a total of four times to the actual happenings of a company. That makes it much more scientific, I'm told, and they have nice linear formulas for modelling how the money is going to be multiplied without any risk at all.
I'm really no friend of NVidia, but judging them by their stock price as if that were a real thing is just *BAAAAARF*
(Score: 2) by ikanreed on Friday November 16 2018, @06:34PM (2 children)
And they latch onto the newest thing.
nVidia was way way way above par/earnings indicated because everyone in stupid finance land was convinced bitcoin was magic and vaguely understood GPUs to be involved. Good fundamentals mean little to the kind of idiot who actually runs our dumb system.
(Score: 0) by Anonymous Coward on Friday November 16 2018, @06:48PM (1 child)
Everything is inflated due to ZIRP, now that its ending the cash is flowing back out to be used as collateral for (less risky) loans. It first comes from the areas that got pumped the most recently, then moves down the line. It is simple as that.
If allowed to continue, it is going to be a great time for the "working class" once real estate becomes cheaper, in turn stores can sell items for cheaper, and prices in general come in line with the wages (that is the last place the ZIRP money trickles).
(Score: 3, Insightful) by ikanreed on Friday November 16 2018, @07:02PM
Also stock buybacks financed by an unwarranted corporate tax-cut. Had to address the risk that there might have been some institutions that weren't over-leveraged to death.
Zero interest was warranted up until maybe 2010. And it only made sense then because we'd done ourselves a way-too-low interest growth right smack into 2007's stupidity.
I'm against any economic policy that posits the ultra-rich are sensible with their money.
(Score: 1, Interesting) by Anonymous Coward on Friday November 16 2018, @07:42PM (1 child)
Unfortunately, that is not true. As per a very thorough research that was reported here on SN several years ago, it was found that day-trading is real gambling, which is still better than slot machines because slot machines are written to give only ~90% return asymptotically. Long term trading, on the other hand, is so well researched that you would envy the knowledge these people have about a business they don't have any direct relationship with. You would envy that you don't have the tools or the vision. Just to remind people, Michael Burry [wikipedia.org] "through his analysis of mortgage lending practices in 2003 and 2004, correctly forecast that the real estate bubble would collapse as early as 2007". Forecasting 2-4 years into future is normal, and people who have the mental fortitude, interest, zeal and knack for it, make a lot of more everyday.
Of course, most traders are not like that, just like most managers are not good at managing, and most engineers aren't good at engineering, and most coders aren't good at coding. Most people get-by their life by taking shortcuts in the hope that no-one would get caught, and statistically they stand correct. And just like that, most traders do make money by aping the good ones, until they lose a lot of money, which most of them don't.
(Score: 0) by Anonymous Coward on Friday November 16 2018, @08:04PM
Long-term traders are mostly not modelling businesses, or reality.
They are modelling the behaviour of other traders!! (successfully so)