Option Witch | Nvidia's Massive FCF Could Make it Worth 40% More, Ideal for Short Put Plays

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Nvidia Inc. produced massive free cash flow (FCF) margins in its latest quarter ending April 28, 2024 - over 57.3% of quarterly sales, up from 50.7% last quarter. At this pace, NVDA stock could be ...

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At this pace, NVDA stock could be ...</p>\n\n<a href=\"https://www.barchart.com/story/news/26436306/nvidia-s-massive-fcf-margins-could-make-it-worth-45-more-at-150-p-sh-post-split\">Source Link</a>\n\n</div>\n","source":"barchart_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Option Witch | Nvidia's Massive FCF Could Make it Worth 40% More, Ideal for Short Put Plays</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nOption Witch | Nvidia's Massive FCF Could Make it Worth 40% More, Ideal for Short Put Plays\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-05-28 17:58 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.barchart.com/story/news/26436306/nvidia-s-massive-fcf-margins-could-make-it-worth-45-more-at-150-p-sh-post-split><strong>Barchart</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Nvidia Inc. produced massive free cash flow (FCF) margins in its latest quarter ending April 28, 2024 - over 57.3% of quarterly sales, up from 50.7% last quarter. At this pace, NVDA stock could be ...</p>\n\n<a href=\"https://www.barchart.com/story/news/26436306/nvidia-s-massive-fcf-margins-could-make-it-worth-45-more-at-150-p-sh-post-split\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4588","symbol_name":"碎股","start_time":0,"source_url":"https://www.barchart.com/story/news/26436306/nvidia-s-massive-fcf-margins-could-make-it-worth-45-more-at-150-p-sh-post-split","article_id":"2438684390","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2438684390","pubTimestamp":1716890288,"sourceInfo":{"source_id":"barchart_highlight","name":"Barchart"},"weMediaInfo":null,"summary":"Nvidia Inc.  produced massive free cash flow  margins in its latest quarter ending April 28, 2024 - over 57.3% of quarterly sales, up from 50.7% last quarter. At this pace, NVDA stock could be worth 45% more at close to $150 per share, post-split over the next year.Here is what happened in terms of free cash flow. Nvidia generated almost $15 billion  in FCF in its fiscal Q1 2025. That represents 57.35% of the quarter's $26.044 billion in revenue. This is one of the highest FCF margins in the tech world.Moreover, this far exceeds the FCF margin it made last quarter: $11.217 billion on $22.103 billion in revenue, or a 50.75% FCF margin. This means that the company has massive operating leverage. That means that as revenue rises, its profitability and FCF margins can be expected to increase exponentially.Source: Nvidia quarterly report and CFO Commentary - Q1 2025. That has huge implications for the value of NVDA stock going forward, even if the rate of revenue growth slows. Here is how t","collect":0,"end_time":0,"defaultTopTitle":"barchart.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4588":"碎股","LU0061474705.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN \"AU\" (USD) ACC","LU0097036916.USD":"贝莱德美国增长A2 USD","BK4551":"寇图资本持仓","LU0320765059.SGD":"FTIF - Franklin US Opportunities A Acc SGD","IE00BD6J9T35.USD":"NEUBERGER BERMAN NEXT GENERATION MOBILITY \"A\" (USD) ACC","LU0289960550.SGD":"AB FCP I - GLOBAL EQUITY BLEND PORTFOLIO 'A' (SGD) ACC","LU0198837287.USD":"UBS (LUX) EQUITY SICAV - USA GROWTH \"P\" (USD) ACC","LU0061475181.USD":"THREADNEEDLE (LUX) AMERICAN \"AU\" (USD) ACC","LU0276348264.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN\"AUP\" (USD) INC","LU0316494557.USD":"FRANKLIN GLOBAL FUNDAMENTAL STRATEGIES \"A\" ACC","NVDA":"英伟达","BK4581":"高盛持仓","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","BK4549":"软银资本持仓","LU0127658192.USD":"EASTSPRING INVESTMENTS GLOBAL TECHNOLOGY \"A\" (USD) ACC","BK4548":"巴美列捷福持仓","IE0009356076.USD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A2\" (USD) ACC","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","LU0289739343.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (SGD) ACC","IE00B7KXQ091.USD":"Janus Henderson Balanced A Inc USD","BK4529":"IDC概念","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","LU0109391861.USD":"富兰克林美国机遇基金A Acc","BK4554":"元宇宙及AR概念","BK4212":"包装食品与肉类","LU0238689110.USD":"贝莱德环球动力股票基金","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","BK4592":"伊斯兰概念","IE00BJJMRX11.SGD":"Janus Henderson Balanced A Acc SGD","IE0004445239.USD":"JANUS HENDERSON US FORTY \"A2\" (USD) ACC","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","IE00B19Z9505.USD":"美盛-美国大盘成长股A Acc","LU0082616367.USD":"摩根大通美国科技A（dist）","BK4585":"ETF&股票定投概念","BK4567":"ESG概念","GB00BDT5M118.USD":"天利环球扩展Alpha基金A Acc","LU0056508442.USD":"贝莱德世界科技基金A2","BK4534":"瑞士信贷持仓","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4587":"ChatGPT概念","LU0308772762.SGD":"Blackrock Global Allocation A2 SGD-H","BK4211":"区域性银行","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","LU0109392836.USD":"富兰克林科技股A","BK4527":"明星科技股"},"translate_title":"英伟达的大规模FCF可能使其价值增加40%，是卖空交易的理想选择","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"NVDA":1},"content_text":"Nvidia Inc. produced massive free cash flow (FCF) margins in its latest quarter ending April 28, 2024 - over 57.3% of quarterly sales, up from 50.7% last quarter. At this pace, NVDA stock could be worth 45% more at close to $150 per share, post-split over the next year.Here is what happened in terms of free cash flow. Nvidia generated almost $15 billion ($14.936 b) in FCF in its fiscal Q1 2025. That represents 57.35% of the quarter's $26.044 billion in revenue. This is one of the highest FCF margins in the tech world.Moreover, this far exceeds the FCF margin it made last quarter: $11.217 billion on $22.103 billion in revenue, or a 50.75% FCF margin. This means that the company has massive operating leverage. That means that as revenue rises, its profitability and FCF margins can be expected to increase exponentially. Source: Nvidia quarterly report and CFO Commentary  - Q1 2025That has huge implications for the value of NVDA stock going forward, even if the rate of revenue growth slows. Here is how that might work out.Valuing NVDA StockOne way to value NVDA stock is to assume that its trailing 12-month FCF margins will increase. Then apply that FCF margin estimate to forecasts of revenue over the next 12 months. Finally, use an FCF yield metric to value this FCF estimate.For example, over the last year including FY Q1 2025, Nvidia has generated over $39.3 billion of FCF on $79.77 billion in revenue. That works out to a trailing 12-month (TTM) FCF margin of 49.3%. Given that its latest quarterly FCF margin was much higher at 57.35%, let's estimate that over the next 12 months (NTM) Nvidia will make at least 53.5% FCF margins.So, for example, analysts estimate that revenue for this fiscal year ending Jan. 2025 will reach $120.56 billion and $154.82 billion next year. That implies that the NTM revenue forecast is $137.69 billion on average.Applying a 53.5% margin results in an NTM FCF forecast of $73.66 billion. That is 23% higher than a rolling run rate estimate from Q1 2025 (i.e., $14.936 billion x 4, or $58.74 billion).As a result, the market is likely to keep valuing NVDA stock at least 23% higher.Price Target for NVDAOne way to value this huge FCF estimate is to use an FCF yield estimate. For example, Nvidia has generated $39.3 billion in FCF in the last year and it now has a $2,574 billion market cap. That means that its FCF yield valuation today is 1.53% (i.e., $39.3b/$2,574b). That is also the same as multiplying FCF by 65.5x (i.e., the inverse of 1.53%).Just to be conservative, let's use a 2.0% FCF yield metric (i.e., a 50x multiple). Therefore, multiplying the $73.66 billion NTM FCF estimate (see above) by 50x results in a market cap estimate of $3,683 billion (i.e., $3.688 trillion). That is 40.7% higher than today's market cap of $2.62 trillion.In other words, sometime in the next year, the market is likely to value NVDA stock 40.7% higher, once it realizes that the company will generate at least 53.5% FCF margins over the next 12 months.That implies that NVDA stock is worth 40.7% more than its price today of $1,064.69 (i.e., $106.47 post-split effective June 7), or $149 per share post-split.Investors should consider that this estimate is based on analysts' revenue forecasts. Even if the growth rate slows, as long as its FCF margins stay over 53.5% it's likely that this price target could still hold.Short Put PlaysOne way to play this is to take advantage of the high put premiums in NVDA stock. That way, even if the stock falls, investors can buy in at a lower price, plus gain some income.For example, look at the June 7 put option expiration period, less than 2 weeks from now. The $1,000 strike price (i.e., $100 post-split), which is 6.5% below spot price, trades for $8.12 ($0.81) on the bid side. That works out to a 26.92% yield (annual return) for the short seller. $NVDA 20240607 1000.0 PUT$Source: Tiger Trade AppMoreover, this is a good way to buy into NVDA stock, even if it falls below $1000 (i.e., $100 post-split). The breakeven price is attractive, i.e., $1,000-$8.12, or $992 (i.e., $92.0 post-split), or 7.3% below today's price.The problem is that an investor has to secure $100,000 (i.e., 100 x $1,000) just to make $1,300 in income. After the split goes into effect, investor will only have to secure $10,000 to do this same trade, although the income made would be $130. That will make shorting puts much easier to do and could end up pushing premiums lower.Nevertheless, so many people expect NVDA stock to fall that the general levels of put option premiums for NVDA could remain elevated. This means that it could make sense for new potential investors in NVDA stock to sell short close out-of-the-money strike prices to gain a good entry price.The bottom line is that over the next year NVDA stock still looks undervalued. Shorting OTM puts is an attractive way to buy into the stock.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":6,"commentSize":0,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.0","shortVersion":"4.24.0","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2438684390"}