[TOPIC] Financial fraud & CEO reduction: How long will Nvidia bleed?
Recently, conspiracy theories regarding the alleged falsification of NVIDIA's second-quarter financial report have been circulating on social media and investor forums, causing a drop in stock prices on September 6th and 7th.
Plus, the stock sale of CEO Jensen Huang also makes the stock performance of $NVIDIA Corp(NVDA)$ worse.
1. Jensen Huang sells $42.8 mln worth of stocks
According to recent filings, Huang exercised stock options and sold the acquired shares over the past few trading sessions. He exercised his stock options in blocks of 29,688 shares at an exercise price of $4 per share.
Subsequently, he sold these shares in three separate blocks, with prices ranging from $466.13 to $497.17 per share. From these sales, Huang generated approximately $14 million in proceeds from each block, resulting in a total of $42,828,053.
2. Conspiracy theorists questioned about Coreweave’s role in inflating $NVIDIA Corp(NVDA)$ revenue
How NVIDIA managed to double its revenue year-over-year without a significant increase in costs?
Involvement of a supported AI startup, Coreweave, in inflating the second-quarter revenue.
However, analysts and mainstream experts have strongly refuted these conspiracy theories.
3. Analysts: a highly contested battle between long and short
Analysts argue that the increase in NVIDIA's gross margin is due to accounting practices that include inventory reserves and that, when adjusted, the actual cost increase is within a normal range.
Additionally, they point out that Coreweave's financing was unrelated to NVIDIA's revenue, and there is no direct evidence linking the two companies in a scheme to inflate earnings.
Furthermore, analysts believe that the conspiracy theories surrounding NVIDIA are indicative of a highly contested battle between long and short positions in the stock, driven by fears of an AI bubble burst.
In contrast to the conspiracy theories, the majority of Wall Street analysts covering NVIDIA maintain "buy" ratings, with no "sell" ratings, and an average target price suggesting substantial upside potential in the stock.
How do expect Nvidia’s stock price trend?
Will it continue to fall under the pressure of sale and negative news?
Or will it rebound after it erased all the gains since the Q2 earnings?
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$NVIDIA Corp(NVDA)$
has gone up 214% year todate and the current pullback is not surprising. Of course after touching a high of over USD 500 per share, it is somewhat of a let down.
However for long term investors, this is a golden opportunity to buy on weakness.
Nvidia is the number 1 semiconductor company due to the high demand for its specialised chips used for AI machine learning.
So it is important to focus on the long term exponential growth of Nvidia and not to be alarmed by the temporary setback.
As Warren Buffett likes to say, when there is Fear in the markets, it's time to be greedy.
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