Andy,
but that $450 million dollars of inventory was stuck in the distribution channel for Crypto
I think that this is what I essentially said in my post on NPI. The real growth was 33% or $9.290B versus $9.714B reported. Difference is $424 million. So if $9 million real crypto sales, then $415 million stuck there. So if gaming was really only $5.19B and there is $0.415 to $0.45B stuck there, how long to clear it. These were for desktop gaming. Don’t know what % of gaming that is. And again, the unknown AMD inventory.
KC
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A short article specified that CEO Huang had recently sold $40 million worth of shares. Perhaps he did. However, on the insider roster on Yahoo, his last sale was at $166 for around $3 million. He has automatically been selling, periodically, all the way up, with “small” amounts such as that.
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Looks like about $11.2M sold between Sept. 19th and 21st (41,253 shares at an average price of $271.98):
That was a very useful link you included, linking to the SEC form 4. Based on that form he has over 20 million shares in total in various accounts, and he sold all of 41 thousand, which comes to about 1/500th of his total, or a massive 00.2% of his position.
Now, I’m not invested in Nvidia at present, but if you are a stockholder, I think getting all worked up about that insider trade is silly on the face of it.
Saul
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That was a very useful link you included, linking to the SEC form 4. Based on that form he has over 20 million shares in total in various accounts, and he sold all of 41 thousand, which comes to about 1/500th of his total, or a massive 00.2% of his position.
Now, I’m not invested in Nvidia at present, but if you are a stockholder, I think getting all worked up about that insider trade is silly on the face of it.
Saul
Agreed.
Huang’s paper net worth (only including his NVDA share holdings) has dropped from a peak of ~$5.8 billion in August down to about $3 billion at present, so his interests are definitely aligned with a high NVidia share price.
-volfan84
still long NVDA ($17.52/share cost basis)
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Now, I’m not invested in Nvidia at present, but if you are a stockholder, I think getting all worked up about that insider trade is silly on the face of it.
Saul
Insiders sell shares for a variety of reasons. IMO it is usually of no consequence. It is when insiders buy shares that my interest is piqued.
Hi KC,
The real growth was 33% or $9.290B versus $9.714B reported. Difference is $424 million. So if $9 million real crypto sales, then $415 million stuck there. So if gaming was really only $5.19B and there is $0.415 to $0.45B stuck there, how long to clear it. These were for desktop gaming. Don’t know what % of gaming that is. And again, the unknown AMD inventory.
Thanks for the confirmation KC. I think another thing you have to calculate is that this are the mid range video cards so how much of sales do they make up? Here is a pricing of video cards and a comment how cheap they are.
https://www.pcgamer.com/best-graphics-card-deals-today/
you can pick up the rtx 2070 for about $500 dollars and it has ray tracing. So maybe everyone jumps over all the inventory and NVDA has to eat most of it. Unless they just sell it all of to the desktop’s where nobody cares about video just price. So they have to sell at 50% off and they get $225 million for the $450 million in inventory.
Andy
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Tinker I believe though I could be wrong that that particular sale that author wrote about was from last year like Sep-Nov timeframe.
The backward looking growth couldn’t be less relevant if they are going from +21% growth to negative -15%.
Why on earth would product sales from 10 Quarters ago be worth anything in today’s analysis?
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Hi NajdorfSicilian,
Why on earth would product sales from 10 Quarters ago be worth anything in today’s analysis?
Because it shows a direction in which growth has been heading and how it’s different divisions have been doing. I would like to see your analysis of this stock so I can evaluate what I am doing wrong. Also what numbers are you using to show growth going to negative 15%? I have it at -7%.
Andy
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What is going to matter to gaming growth is how well received Turing is. There have been many technological leaps that turned out to not give enough in utility gains to be successful in the end.
If Turing turns out to be revolutionary and changes what games are (will start from the high end and then move down) then the upgrade cycle for gaming cards will be huge for Nvidia. Something like 85% of users have old cards, and the market is growing as well.
Only Turing can provide ray tracing and the benefits to be derived therefrom.
The question becomes is ray tracing a sufficient upgrade to entice gamers to upgrade more rapidly than they have in the past? Will it become must have not only in the high end but the middle end as well? If so Nvidia will benefit from a strong multi-year upgrade cycle that should produce good growth. Not the 60% that Nvidia had for a quarter or two, but it will get back to normal and by this time next year (assuming the games come out and consumers find that it is worth upgrading in order to play in the ray tracing mode) double digit growth should return to the gaming side of things.
So it is not so much the numbers to examine, but rather, the marginal utility that ray tracing brings vs. the status quo. If the benefit is large enough the growth will come. On the other hand I just bought a MacBook that is like 1.3 mghz of speed (but with “boost” to 3 mghz). I mean this is way underpowered by any modern standards. And yet, with the way it is optimized, as long as I am not doing high level graphics, this MacBook allows me to run my business equally as well, with no difference in speed, as my MacBook Pro.
Analogous, if that were the case with the graphic chips, only those desiring the high end would want the Pro (pending relative pricing of course). Will Turing only be something the high end wants and everyone else can get by with the MacBook, or will we all need “MacBook Pros” to play the games we want?
I think that is really the issue to be resolved, as the numbers will then take care of themselves.
Tinker
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Also what numbers are you using to show growth going to negative 15%?
Certainly no need to take my word for it, I’m using Management’s forecast numbers:
https://investor.nvidia.com/financial-info/quarterly-results…
From the earnings release, they guided down 15% YoY.
Naj
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From the earnings release, they guided down 15% YoY.
No they didn’t they guided down 7.2% YoY and 15% sequentially Why the need to lie?
Andy
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Andy - another in depth writeup, with solid insights into the real business operational details. That analysis makes a solid case for how it could double in 3 years. It also could be a rebound valuation play just based on the ugliness of the last few days.
I don’t do individual stock analysis and selection anymore, but your analysis is about as deep as it could get from the outside. Really well done.
My suggestion would be to set some benchmarks now that you’ll be looking for in the next two to four quarters of numbers to determine if they’re hitting numbers that support your valuation estimate; I wouldn’t wait to try to remember it or justify things 3 months from now. Just a suggestion, you likely already have that nailed down.
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FlyingCircus,
My suggestion would be to set some benchmarks now that you’ll be looking for in the next two to four quarters of numbers to determine if they’re hitting numbers that support your valuation estimate; I wouldn’t wait to try to remember it or justify things 3 months from now. Just a suggestion, you likely already have that nailed down.
That is a great idea, I really appreciate it. Thanks for the help.
Andy
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One more thing FlyingCircus, I went back and read my post and this part was incorrect.
I am going to give Q419 a growth rate of 20% so the average growth rate for 2019 will be 36.75%.
I should have said I am going to give Q419 a growth rate of 5% (NVDA is guiding for -7%) and the average growth rate will be 32.72 %. Thanks again for your help.
Andy