Nvidia's shares are experiencing a decline, leaving investors feeling disillusioned.
In a surprising turn of events, Nvidia's shares experienced a 2.5% decline following the release of its Q3 2021 earnings report. Despite beating revenue expectations, the company's earnings per share (EPS) fell short of analyst estimates, causing a slight negative earnings surprise.
Nvidia reported earnings of $0.81 per share, which was below the consensus estimate of $0.87 per share. However, the company's revenue was robust, coming in at $44.06 billion, beating the expected $43.09 billion and showing a 69.2% year-over-year increase.
The EPS miss may have tempered investor enthusiasm, leading to the stock pullback. It's worth noting that earnings reflect profitability and immediate returns to shareholders more directly than revenue, making them a crucial metric for investors.
Despite the recent earnings and revenue figures, analysts remain optimistic about Nvidia's stock. In after-hours trading, Nvidia's stock fell as much as 5%, but analysts continue to recommend buys for the company's stock. The average upside potential for Nvidia's stock, as indicated by analysts, is 10.3%.
It's also important to note that Nvidia's stock has already seen a significant rally this year, with a YTD increase of 194%. This could have contributed to profit-taking following the news, as investors may have been looking to lock in their gains.
Whispers on Wall Street were reportedly much higher following Nvidia's past beats, suggesting that investors had high expectations for the company's performance. However, the stock's failure to spark a significant price rally following the latest earnings report may be a cause for concern.
Looking ahead, a break below the 50-day moving average at $133 could signal a correction for Nvidia's stock. This suggests that investors should keep a close eye on the company's performance in the coming months.
In conclusion, the stock's decline was primarily due to earnings per share coming in below expectations despite revenue growth beating forecasts. Despite this setback, analysts still see potential for further growth in Nvidia's stock.
[1] Nvidia Q3 2021 Earnings Report [2] Wall Street Journal, Nvidia Stock Falls After Earnings Miss EPS Estimates, 1 October 2021
Investors' enthusiasm might have waned due to Nvidia's EPS miss, influencing the 2.5% decline in its shares. For further investing opportunities, analysts continue recommending buys for Nvidia's stock, hinting at a potential upside of 10.3%.
