Nvidia Stock News and Forecast: Why did NVDA drop after EPS, revenue, guidance beat?
- Nvidia shares fall 2% after reporting earnings after the close on Wednesday.
- NVDA stock reported strong earnings, beating forecasts on the top and bottom lines.
- NVDA stock also announced guidance ahead of analyst forecasts for the next quarter.
Nvidia (NVDA) reported earnings after the close on Wednesday. The numbers were strong with a beat on the top and bottom lines, but the stock failed to react. Recently, the market has witnessed stocks beating on both EPS and revenue numbers but being punished for a disappointing outlook. That was not the case with Nvidia as it provided forward guidance well ahead of analyst expectations.
It appears to be a case of "better to travel than arrive." We did point out on Wednesday and last week that the risk-reward was to the downside. The macro environment has turned, and high growth stocks are not favored. Nvidia is highly profitable, but it trades on a very high multiple reflecting its strong growth. This is a further sign that the market is structurally bearish now. Stocks are going down on good news.
Nvidia Stock News
Earnings per share (EPS) came in at $1.32 versus estimates for $1.22. Revenue was $7.64 billion versus estimates of $7.43 billion. Nvidia also guided revenue for the next quarter at $8.1 billion, while analysts had been estimating $7.3 billion for Q1 2022. The company also declared a dividend of $0.04. The CEO said the company gave its best shot at acquiring Arm Ltd, but the deal fell through on regulatory concerns. Nvidia also declared a small $0.04 dividend.
Nvidia Stock Forecast
Many are asking why the stock did not react better to strong earnings and more importantly guidance. FXStreet identified the already strong performance ahead of earnings. NVDA stock rose 10% earlier this week. It also trades on a high multiple in an environment where that is more scrutinized. Importantly, NVDA shares were at a pivot point, the long trendline from the highs of last year. This reaction looks to confirm the downtrend and there will be no breakout.
Small swing support exists at $240, and longer-term the move will target the $200 level. The 200-day moving average along the way at $228 is also significant. Breaking above $267 puts Nvidia back in bullish territory.
NVDA chart, daily
Like this article? Help us with some feedback by answering this survey:
Premium
You have reached your limit of 3 free articles for this month.
Start your subscription and get access to all our original articles.
Author
Ivan Brian
FXStreet
Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.
