Doesn’t seem unusual to me. The folks who have compared NVDA’s stock performance to a coiled spring are correct.
Everybody here is familiar with the adage “In the short run, the market is a voting machine, but in the long run it is a weighing machine.” Directly related to that is that share price performance does not necessarily track company performance. Everybody here “knows” that…but it appears that not everybody believes it.
I saw this coiled spring thing happen with Intuitive Surgical (ISRG) years ago. Super company performance…relatively stagnant stock performance. Finally (like a coiled spring) the stock price shot up over the course of a few quarters. Many of you on this board recently experienced a similar phenomenon with ATVI. It’s just the way the market works…it isn’t all rockets flying up and up and up without respite.
As some on this board have said (like tj), this just requires patience. A good character quality.
This board started out as one focused on stuff like EPS and “growth at a reasonable price”. Now it’s mostly “land and expand”. That’s fine…but it’s worthwhile to remember that both philosophies have their place and it isn’t all about constant upward portfolio values. Let me be crazy and talk about that EPS and “reasonable price” for a moment.
In 2017, EPS was a bit below $5. It’s estimated by analysts to hit the low $7s this year. That’s about a 50% growth. 2019 is forecasted to be $8 or $9+, not nearly as much growth…about 25%-30%. Not long ago, I expected NVDA to hit $10 a share in 2018 and now I’m thinking I was off base. The most recent quarterly earnings were actually LOWER than the preceding quarter. Let me repeat that: LOWER EPS. In light of that, is it surprising that the stock price has taken a breather? Not in my view!
Let’s just see what the Company brings us in coming quarters with respect to actual performance. If analyst predictions are correct (50% EPS growth in 2018 and 25%-30% in 2019), then the current forward PE of 38 or so is not unreasonable. If 2018 EPS beats expectations by a good amount, we should see another share price surge… in time. Might be in 2018. Might be in 2019. Patience. (There’s that word again!).
IMO, this is a great company with smart management. As “owners” (with little say in things), we need to just let management do their job and not breathlessly dissect every little bit of news and speculate when certain things may come to pass. Just take that deep breath and see what the actual results are quarter by quarter. If, as expected, the company does well…shareholders will do well. In time. You can’t expect to see strong weekly or monthly share price gains. That’s ABNORMAL, not normal.
Lest you think I’m a bear on NVDA, let me just say that it is barely my #2 holding (just behind TTD) and that my entire position is in January 2020 call options. That isn’t a bear, it’s a fairly reckless bull position. And lest you think I just haven’t invested long enough to understand how it all works, I’ve been doing this for 53 years. And went from near bankruptcy (failed business) to early retirement in 19 years. This isn’t my first rodeo…
So, I’d just repeat…take that deep breath, recognize there is no mystery here and enjoy life. I plan to go to the gym, then come home to read today while we get pelted with rain and wind here in Charlotte. And I’ll keep following my Fool boards (plus deal with some Fool assignments). And when 3Q numbers come out, re-assess my companies…again. Daily hand wringing over investments really isn’t the meaning to life folks.
Well, that’s enough. I tend to make my point without writing a book.
Rule Breaker / Market Pass Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.