$NVDA EARNING ANALYSIS IN 3min

TopTradingEdge

21 Aug 202203:52

Summary

TLDRIn this technical analysis video, the presenter examines NVIDIA's stock performance ahead of its earnings release. They highlight the stock's downward trend since November 2021, noting multiple resistance levels and a significant drop in net income by 45% in Q1 2022. The video discusses the company's P/E ratio, comparing it to industry standards, and suggests that NVIDIA's current price might be overvalued at almost 90 times the expected earnings. The presenter also points out technical indicators like the MACD, which is bearish, and key support levels to watch, concluding with a cautious outlook on the stock's potential post-earnings performance.

Takeaways

📉 Nvidia's stock has been on a downward trend since November 2021, with falling tops indicating a bearish movement.
📊 The stock has faced multiple rejections at the sloping resistance line, the 100-day moving average, and the top resistance level.
💼 The 50-day moving average is providing support at around $169-168, which is a key level to watch for potential price action.
🔍 There is an internal support level identified at a gap around $157, which could be a significant area of interest if the price drops further.
🔢 In the first quarter of 2022, Nvidia reported a net income of $1.6 billion, which is a 45% decrease from the previous quarter's $3 billion.
📉 This significant drop in net income raises concerns about the company's financial health and could impact investor sentiment.
📈 The company's expected earnings per share (EPS) for the current quarter is $0.49, which, if achieved, would still place the stock at a high valuation compared to other tech giants.
📊 A valuation comparison shows Nvidia's price-to-earnings (P/E) ratio at approximately 90 times, which is higher than the 25-35 times range of other major tech companies like Apple, Google, and Microsoft.
📉 The Moving Average Convergence Divergence (MACD) indicator is pointing south, suggesting a potential bearish continuation for the stock.
🚨 If the upcoming earnings report results in a rejection, the stock price could test the lower support levels, potentially revisiting the bottom established in the recent downtrend.
🗓️ The speaker emphasizes the importance of watching the earnings release and the subsequent market reaction, as it could dictate the stock's direction in the short term.

Q & A

What is the current focus of the video script discussion?
-The video script focuses on the technical analysis of NVIDIA's stock performance, particularly in anticipation of its earnings report.
How has NVIDIA's stock trend been since November 2021 according to the script?
-The script indicates that NVIDIA's stock has been slowly grinding down since November 2021, with falling tops and a downward channel being formed.
What is the significance of the 'rejection' mentioned in the script?
-In the context of the script, 'rejection' refers to the stock price failing to break through a resistance level, such as the sloping resistance guard and the 100-day moving average.
What are the support levels mentioned for NVIDIA's stock in the script?
-The script mentions two support levels for NVIDIA's stock: the 50-day moving average support at around $168, and an internal support at around $157.
What was the net income reported by NVIDIA in the first quarter of 2022 compared to the previous year?
-The script reports that NVIDIA's net income for the first quarter of 2022 was $1.6 billion, which is a 45% decrease compared to the $3 billion reported in December 2021.
How does the script analyze NVIDIA's earnings per share (EPS) in comparison to its market price?
-The script calculates the price-to-earnings (P/E) ratio based on NVIDIA's expected EPS of 49 cents, resulting in a P/E of 90 times, which is almost double the market average for major tech companies.
What is the MACD indicator suggesting about NVIDIA's stock trend according to the script?
-The script mentions that the MACD indicator is pointing south, which typically indicates a bearish trend or potential downward movement in the stock price.
What is the potential outcome for NVIDIA's stock if the earnings report is rejected according to the script?
-If the earnings report is rejected, the script suggests that NVIDIA's stock might test the bottom support level, potentially leading to a further decline in price.
What is the comparison of NVIDIA's P/E ratio with other major tech companies mentioned in the script?
-The script compares NVIDIA's P/E ratio of 90 times with other tech companies such as Apple at 35 times, Google at 25 times, and Microsoft at around 30-32 times.
What is the script's final recommendation for viewers regarding NVIDIA's stock?
-The script advises viewers to watch the support levels closely and to be cautious, as the stock appears to be facing significant resistance and potential downward pressure.

Outlines

00:00

📉 Nvidia's Stock Performance and Earnings Analysis

This paragraph discusses the technical analysis of Nvidia's stock performance, highlighting a downward trend since November 2021. Key points include the falling tops, a downward channel, and resistance levels that the stock has faced. The analysis also touches on the 100-day and 50-day moving averages, indicating areas of support at $168 and potential internal support at $157 due to a gap. The speaker also reviews Nvidia's earnings, noting a significant drop in net income from the previous year's quarter, which is a cause for concern. The paragraph concludes with a look at the company's expected earnings per share (EPS) and a comparison to its current stock price, suggesting that the market might be overvaluing the stock based on the expected earnings.

Mindmap

Keywords

💡Earnings

Earnings refer to the profits a company makes over a specific period of time. In the context of the video, the speaker is analyzing NVIDIA's stock performance in anticipation of the company's earnings report. The earnings report is a key indicator for investors to gauge a company's financial health and future prospects, which is why the speaker is focusing on NVIDIA's past earnings performance to predict potential stock movements.

💡Technical Analysis

Technical analysis is a method used in finance to predict the direction of stock prices through the study of historical price patterns. The video is centered around this concept, as the speaker uses technical analysis to examine NVIDIA's stock trends, identifying patterns such as falling tops and resistance levels to make informed predictions about the stock's future performance.

💡Channel

In technical analysis, a channel refers to a price trend line that is drawn parallel to the trend, providing a visual guide to potential support and resistance levels. The script mentions a 'downward channel' which indicates that NVIDIA's stock price has been trending downward over time, and the speaker uses this channel to analyze the stock's behavior and predict future movements.

💡Resistance

Resistance in stock trading is a price level that an asset's price has difficulty surpassing, as it is seen as a barrier to higher prices. The script discusses 'sloping resistance' and 'top resistance,' which are levels where the stock price has faced rejection in the past, suggesting that these levels could continue to act as barriers to price increases.

💡Support

Support is the price level at which an asset's price is expected to find a floor, having difficulty falling below it. The speaker identifies '50-day moving average support' and 'sloping support' as key levels where the stock price may find a base, and if these levels are breached, it could indicate further downward movement.

💡Moving Average

A moving average is a widely used indicator in technical analysis that helps smooth out price data by creating a constantly updated average price. The script mentions the '100-day moving average' and '50-day moving average' as significant levels that have acted as resistance and support, respectively, for NVIDIA's stock price.

💡Net Income

Net income is the profit a company earns after all expenses have been deducted from its total revenue. The speaker examines NVIDIA's net income from previous quarters to understand the company's earnings performance. A significant drop in net income, as mentioned in the script, can negatively impact investor confidence and potentially the stock price.

💡EPS (Earnings Per Share)

Earnings Per Share (EPS) is a measure of a company's profitability calculated as net income divided by the number of outstanding shares. The speaker calculates the EPS for NVIDIA and compares it to the stock price to determine if the current price is overvalued or not, using it as a part of the analysis to predict the stock's future direction.

💡MACD (Moving Average Convergence Divergence)

MACD is a technical indicator used to identify trends and momentum changes in a stock's price. The script mentions that the MACD is 'pointing south,' which typically indicates a bearish signal, suggesting that the stock price may continue to decline based on the current trend.

💡Gap

A gap in stock trading refers to a price space between two trading periods where the price did not trade within that range. The speaker points out a 'gap' in NVIDIA's stock price around 157, which could act as a psychological level of support or resistance and is a point of interest for potential future price action.

💡P/E Ratio

The Price-to-Earnings (P/E) ratio is a valuation ratio calculated by dividing the market value per share by the earnings per share. The speaker uses this ratio to compare NVIDIA's stock price with industry standards, noting that NVIDIA's P/E ratio based on expected earnings is almost double that of other major tech companies, suggesting it may be overvalued.

Highlights

NVIDIA's stock has been gradually declining since November 2021, with falling tops indicating a bearish trend.

The downward channel created shows a rejection at the sloping resistance guard, indicating further bearish signals.

NVIDIA experienced a 45% net income loss in the first quarter of 2022 compared to December 2021, raising concerns about the company's financial health.

The 100-day moving average (purple line) and top resistance levels are showing rejections, suggesting downward pressure on the stock price.

Support levels at 50-day moving average (around $168) and an internal support at $157 are critical to watch for potential price movements.

The transcript discusses the importance of analyzing past earnings to predict future stock performance, with a focus on net income.

NVIDIA's expected earnings per share (EPS) for the upcoming quarter is $0.49, which, when annualized, results in a high price-to-earnings (P/E) ratio compared to industry standards.

The current P/E ratio of NVIDIA is nearly double that of major tech companies like Apple, Google, and Microsoft, indicating overvaluation.

The Moving Average Convergence Divergence (MACD) indicator is pointing south, suggesting a potential downward trend in stock price.

The presenter emphasizes the need to wait and watch the support and resistance levels for NVIDIA's stock before making investment decisions.

A gap at around $157 is identified as a potential area of support to watch for NVIDIA's stock.

The analysis includes a comparison of NVIDIA's current stock price with its earnings, suggesting that the market may be overvaluing the stock.

The transcript provides a technical analysis approach to evaluating NVIDIA's stock performance pre-earnings announcement.

The presenter warns of the potential risks associated with NVIDIA's stock based on the technical indicators and historical earnings data.

The importance of understanding the relationship between a company's earnings and stock price is highlighted, with NVIDIA as a case study.

The potential impact of NVIDIA's earnings report on the stock price is discussed, with a focus on the importance of support and resistance levels.

Transcripts

00:00

are earning on wednesday after hours

00:03

so today we're going to take a look at

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