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Nvidia stock Nvidia Stock Is Falling Blame Bitcoin Ethereum Not the Stock Split

Nvidia stock Nvidia Stock Is Falling Blame Bitcoin Ethereum Not the Stock Split

nvda stock

Nvidia stock Nvidia Stock Is Falling Blame Bitcoin Ethereum Not the Stock Split

Is Nvidia Stock a Buy Now After the 4-to-1 Stock Split? Tue, 20 Jul 2021 06:00:00 -0700-A drop in cryptocurrency prices may have spooked investors who are betting that demand from miners will continue to drive chip sales.

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Nvidia Stock Is Falling. Blame Bitcoin and Ethereum.

July 20, 2021 12:50 pm ET
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Nvidia has hauled in hundreds of millions of dollars selling its chips to cryptocurrency miners, but its exposure to that market is hurting the stock following a slide of more than 3% for Bitcoin and Ethereum in 24 hours.

Nvidia (ticker: NVDA) shares retreated 2.5% to $183.24 on Tuesday, after investors received shares in a four-for-one stock split after the close on Monday. Shares may have briefly appeared to fall harder early in the day, before market data was adjusted to account for the split.

The stock is up 74% over the past year, while the PHLX Semiconductor index, or Sox, has risen 51%.

The company’s most recent exposure to cryptocurrencies dates back to last year, when miners discovered that its Ampere-based graphics chips were good at producing Ethereum. The chips were so popular among miners—videogame players may use one or two, while miners use many, many more—that Nvidia designed a version of the semiconductors that are specifically designed for mining. It throttled the videogame cards’ mining functions.

In its fiscal first quarter, which ended in April, Nvidia sold $155 million of its crypto chips, according to finance chief Colette Kress. Management expects crypto revenue of $400 million for the second quarter.

Kress’s figures don’t include the videogame graphics chips that miners are buying–some of those used by gamers can also be put to work mining. BMO Capital Markets analyst Ambrish Srivastava estimated overall first-quarter cryptocurrency revenue was about $650 million.

Bitcoin’s drop to below $30,000 Monday and the decline in Ethereum, particularly, may have spooked investors who are betting that high cryptocurrency prices will continue to drive Nvidia’s chip sales. Near midday on Tuesday, Ethereum was trading at $1,755.86, but last year, when the price was $300 to $400 range, RBC Capital Markets analyst Mitch Steves estimated one of Nvidia’s RTX 3080 cards would net miners about $3 a day, and take 233 days to achieve profitability.

Last year’s surge of interest in the line of Ampere chips isn’t the first time Nvidia has had big exposure to the volatile cryptocurrency market. Back in 2018, its graphics processors were also popular with miners.

Toward the end of that year, a slump in Bitcoin and other crypto prices prompted miners to try unload their hardware, unleashing a flood of cheap, used Nvidia graphics cards onto the market. Nvidia’s sales slumped, with declines in revenue of as much as 31% for four straight quarters.

Write to Max A. Cherney at max.cherney@barrons.com

Nvidia has hauled in hundreds of millions of dollars selling its chips to cryptocurrency miners, but its exposure to that market is hurting the stock following a slide of more than 3% for Bitcoin and Ethereum in 24 hours.

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July 20, 2021 12:50 pm ET
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Dreamstime

Nvidia has hauled in hundreds of millions of dollars selling its chips to cryptocurrency miners, but its exposure to that market is hurting the stock following a slide of more than 3% for Bitcoin and Ethereum in 24 hours.

Nvidia (ticker: NVDA) shares retreated 2.5% to $183.24 on Tuesday, after investors received shares in a four-for-one stock split after the close on Monday. Shares may have briefly appeared to fall harder early in the day, before market data was adjusted to account for the split.

The stock is up 74% over the past year, while the PHLX Semiconductor index, or Sox, has risen 51%.

The company’s most recent exposure to cryptocurrencies dates back to last year, when miners discovered that its Ampere-based graphics chips were good at producing Ethereum. The chips were so popular among miners—videogame players may use one or two, while miners use many, many more—that Nvidia designed a version of the semiconductors that are specifically designed for mining. It throttled the videogame cards’ mining functions.

In its fiscal first quarter, which ended in April, Nvidia sold $155 million of its crypto chips, according to finance chief Colette Kress. Management expects crypto revenue of $400 million for the second quarter.

Kress’s figures don’t include the videogame graphics chips that miners are buying–some of those used by gamers can also be put to work mining. BMO Capital Markets analyst Ambrish Srivastava estimated overall first-quarter cryptocurrency revenue was about $650 million.

Bitcoin’s drop to below $30,000 Monday and the decline in Ethereum, particularly, may have spooked investors who are betting that high cryptocurrency prices will continue to drive Nvidia’s chip sales. Near midday on Tuesday, Ethereum was trading at $1,755.86, but last year, when the price was $300 to $400 range, RBC Capital Markets analyst Mitch Steves estimated one of Nvidia’s RTX 3080 cards would net miners about $3 a day, and take 233 days to achieve profitability.

Last year’s surge of interest in the line of Ampere chips isn’t the first time Nvidia has had big exposure to the volatile cryptocurrency market. Back in 2018, its graphics processors were also popular with miners.

Toward the end of that year, a slump in Bitcoin and other crypto prices prompted miners to try unload their hardware, unleashing a flood of cheap, used Nvidia graphics cards onto the market. Nvidia’s sales slumped, with declines in revenue of as much as 31% for four straight quarters.

Write to Max A. Cherney at max.cherney@barrons.com


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Nvidia Stock Is Falling. Blame Bitcoin, Ethereum, Not the Stock Split. Tue, 20 Jul 2021 06:00:00 -0700-Nvidia is a powerhouse semiconductor company involved in secular growth trends like gaming, cloud data centers, autonomous vehicles, 5G, and more. Is it a …

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Is Nvidia Stock a Buy Now After the 4-for-1 Stock Split?

July 20, 2021

Nvidia (NASDAQ:NVDA) will be executing a 4-for-1 stock split, and shares are expected to start trading on a split-adjusted basis on July 20. The stock closed at $751.19 on July 19 with a $468 billion market cap. The price-to-earnings ratio was 89, based on a $751 share price. The company had blowout earnings last quarter, reporting over 88% year-over-year revenue growth and a 33.77% net profit margin. The share price ran to a high of $835 before pulling back. Is Nvidia stock a buy now? 

It's easy to see why some investors would shy away from Nvidia at these levels. The stock price has delivered nearly 5,000% returns over the past decade. A $10,000 investment would be worth approximately half a million dollars today. But the company is firing on all cylinders, and when you look under the hood, you will find that its future looks very bright, which can arguably justify the premium share price. One key risk to note is that Nvidia is attempting to acquire ARM Holdings from SoftBank (OTC:SFTB.Y) and has bumped into regulatory pushback. With that said, Nvidia partners with ARM, and they should do fine regardless. Nvidia has its hands in gaming, cloud data centers, cryptocurrency, machine learning, artificial intelligence (AI), professional visualization, electric vehicles (EVs), autonomous driving, 5G, and more!

Of course, you do not own more of Nvidia because of the stock split. If you cut a pizza into four slices, you still have one pizza. With that said, lower share prices can equate to more pin action because of options contracts, and I think the company looks attractive here as a long-term investment.

In the video I break down the key fundamental highlights that will power Nvidia over the next decade. I'll also chart out Nvidia's technicals and provide an opinion on where I think the stock price is headed from here. 

*Stock prices used were the closing prices of July 19, 2021. The video was published on July 19, 2021.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.


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– July 20, 2021
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