nVidia's stock taking a massive beating

[Xentropy]

Originally posted by: ChkSix
Market shares tell only a part of a company's overall net worth. Share volume, outstanding shares, market value, etc all play into the bigger picture. I worked for the American Stock Exchange for 3 years on 86 Trinity Place in lower Manhattan as a market data analyst and know a *little about this.

Nvidia's share volume is 25,878,955 with 165 million shares outstanding. Price is 10.00 a share. 10x25,858,955= $258,589,550.00

On the other hand, here is a little of Ati's info.

The share volume of Ati is a mere 5,699,697 with 245 million outstanding. Price is 14.68 a share. 5,699,697x14.68=$83,671,551.96

Outstanding are unpurchased.

In perspective, if Nvidia had the same share volume (which by the way, is FIVE times larger) as Ati, each stock would be worth upwards of 50 dollars each as opposed to 14.68, going strictly off the current index.

You cannot look at price figures or market drops and percentages as clear indications of a companies net worth, profit margin, or position. The market does not function that way. Nvidia clearly holds a larger portion of the market, regardless of individual share price or percentage flucuations. Due to it's volume, it would have a greater influence on the NASDAQ's daily earnings or losses than Ati.

In the end, it wouldn't make any of the current NV40 or R420 cards perform any slower or faster for that matter.

Uh. If you were a market analyst, I'm surprised at how much you got wrong here.

The "share volume" as you were stating was just the amount of shares traded that particular day up to the time you posted. Volumes at the END of Friday were 42,434,076 for NVDA and 8,435,883 for ATYT, if anyone is curious. Average volumes are 4.9M and 2.5M respectively, so you can see Friday was an especially busy day for both stocks, thanks largely to NVDA's earnings report after hours the previous day (after hours volume from Thursday gets tacked onto Friday volume at market open). The only thing a large share volume for a given day tells us is how many people are holding and how many are running for the exits.

The important numbers are outstanding shares, which multiplied by price tell us the market capitalizations of each company (the total value of the company according to the market, i.e. how much it'd cost to buy up every single share). You mentioned these numbers (165.93M and 246.42M) but then sort of ignored them. These aren't "unsold" shares, just shares that didn't necessarily trade hands that particular day. Floats (or number of shares held by institutions and private investors as opposed to held by the company itself) are 152.7M and 241.5M, respectively, so most of the shares are "sold" and out there available to trade.

Market caps, current stock price times total outstanding shares, are 1.56B for NVDA and 3.55B for ATYT. NVDA's market cap went from 2.42B to 1.56B in one day. Ouch.

At any rate, ATi has been a larger (based on market cap) company than nVidia for most of nVidia's existence (excepting a year and a half or so while Xbox mania had taken over nVidia's stock and ATi had posted losses for 12 straight quarters). ATi has been around a loooong time, and that's why they could afford to bleed cash for so long. nVidia currently has more cash on hand than ATi, though (657M vs 508M), and neither company has significant debt. nVidia's book value (value of assets per share; if they closed shop and sold all their assets and split the money evenly between the shareholders) is twice ATi's thanks to a lower float and higher cash on hand.

Neither company is a bad investment right now. ATi was questionable until about a year ago when they finally started posting profits. Now, they've run pretty far pretty fast, but their sympathy pullback with nVidia's problems may present a buying opportunity. IMHO, nVidia is a tremendous buying opportunity now (they're barely trading above book value), but I'd wait another few days to shake out any remaining fear and make sure the drop is done before buying. It probably won't recover all at once, so a little waiting isn't likely to cause someone to miss the run back up.

Someone mentioned worries over nVidia's P/E of 29. An important thing to note is that's trailing P/E, or based on earnings over the past four quarters. Everyone will agree nVidia hasn't been in great shape for the past year. However, most people will also agree they're showing some promise now with the 6800 series, especially if they can start getting them into the channel in volume, so their NEXT four quarters' earnings are likely to be significantly improved. Based on the earnings analysts currently expect, nVidia's forward P/E is only 9.62, quite a bargain.

 

[hokahknow]

If I had the cash, I would buy some of the nvidia stock.

Instead I will just buy the Nforce chipset and 6800GT.
That is sure to help them out

 

[ponyo]

Originally posted by: Xentropy

Originally posted by: ChkSix
Market shares tell only a part of a company's overall net worth. Share volume, outstanding shares, market value, etc all play into the bigger picture. I worked for the American Stock Exchange for 3 years on 86 Trinity Place in lower Manhattan as a market data analyst and know a *little about this.

Nvidia's share volume is 25,878,955 with 165 million shares outstanding. Price is 10.00 a share. 10x25,858,955= $258,589,550.00

On the other hand, here is a little of Ati's info.

The share volume of Ati is a mere 5,699,697 with 245 million outstanding. Price is 14.68 a share. 5,699,697x14.68=$83,671,551.96

Outstanding are unpurchased.

In perspective, if Nvidia had the same share volume (which by the way, is FIVE times larger) as Ati, each stock would be worth upwards of 50 dollars each as opposed to 14.68, going strictly off the current index.

You cannot look at price figures or market drops and percentages as clear indications of a companies net worth, profit margin, or position. The market does not function that way. Nvidia clearly holds a larger portion of the market, regardless of individual share price or percentage flucuations. Due to it's volume, it would have a greater influence on the NASDAQ's daily earnings or losses than Ati.

In the end, it wouldn't make any of the current NV40 or R420 cards perform any slower or faster for that matter.

Uh. If you were a market analyst, I'm surprised at how much you got wrong here.

The "share volume" as you were stating was just the amount of shares traded that particular day up to the time you posted. Volumes at the END of Friday were 42,434,076 for NVDA and 8,435,883 for ATYT, if anyone is curious. Average volumes are 4.9M and 2.5M respectively, so you can see Friday was an especially busy day for both stocks, thanks largely to NVDA's earnings report after hours the previous day (after hours volume from Thursday gets tacked onto Friday volume at market open). The only thing a large share volume for a given day tells us is how many people are holding and how many are running for the exits.

The important numbers are outstanding shares, which multiplied by price tell us the market capitalizations of each company (the total value of the company according to the market, i.e. how much it'd cost to buy up every single share). You mentioned these numbers (165.93M and 246.42M) but then sort of ignored them. These aren't "unsold" shares, just shares that didn't necessarily trade hands that particular day. Floats (or number of shares held by institutions and private investors as opposed to held by the company itself) are 152.7M and 241.5M, respectively, so most of the shares are "sold" and out there available to trade.

Market caps, current stock price times total outstanding shares, are 1.56B for NVDA and 3.55B for ATYT. NVDA's market cap went from 2.42B to 1.56B in one day. Ouch.

At any rate, ATi has been a larger (based on market cap) company than nVidia for most of nVidia's existence (excepting a year and a half or so while Xbox mania had taken over nVidia's stock and ATi had posted losses for 12 straight quarters). ATi has been around a loooong time, and that's why they could afford to bleed cash for so long. nVidia currently has more cash on hand than ATi, though (657M vs 508M), and neither company has significant debt. nVidia's book value (value of assets per share; if they closed shop and sold all their assets and split the money evenly between the shareholders) is twice ATi's thanks to a lower float and higher cash on hand.

Neither company is a bad investment right now. ATi was questionable until about a year ago when they finally started posting profits. Now, they've run pretty far pretty fast, but their sympathy pullback with nVidia's problems may present a buying opportunity. IMHO, nVidia is a tremendous buying opportunity now (they're barely trading above book value), but I'd wait another few days to shake out any remaining fear and make sure the drop is done before buying. It probably won't recover all at once, so a little waiting isn't likely to cause someone to miss the run back up.

Someone mentioned worries over nVidia's P/E of 29. An important thing to note is that's trailing P/E, or based on earnings over the past four quarters. Everyone will agree nVidia hasn't been in great shape for the past year. However, most people will also agree they're showing some promise now with the 6800 series, especially if they can start getting them into the channel in volume, so their NEXT four quarters' earnings are likely to be significantly improved. Based on the earnings analysts currently expect, nVidia's forward P/E is only 9.62, quite a bargain.

Very nice post! I couldn't have said it better myself.

I'm planning to put nice chunk of change into Nvidia in the next 1-3 months. The only thing that's preventing me from pulling the trigger now is the annual Aug-early Oct market correction. It's also been my experience that the first steep drop is usually never the last. Blasted stocks usually have short dead cat bounce before bleeding down slowly little further before driving out the first wave of speculative bottom fishers. Only when they give up does that stock usually find the true floor and start the real recovery.

With the solid newly released 6800 product line and lowered expectation and guidance, Nvidia should easily surprise to the upside in the coming quarters. I think they took this opportunity to sandbag their future earnings guidance. They won't get out of the doghouse anytime soon and will likely be dead money nearterm but within a year, this miss will have all been forgotten and the stock price should have recovered nicely IMO.