I just learned the hard way that the stock market can be very unpredictable. Yesterday I wrote about NVIDIA’s earning results and I said I expected the stock to go up because earnings were higher than analysts expected and also because the guidance NVIDIA gave during the conference call was pretty good.
I was quite surprised to see how Wall Street dropped NVDA like a rock today. NVIDIA’s shares opened at $26.25 today down from $27.02 (and even a +$28.5 high in after hours trade) yesterday and tanked all the way down to $22.55! Really weird that NVIDIA got punished today as they didn’t really report any bad news, the stock dropped 16.32% making it one of the biggest losers of the day.
Pretty depressing and quite irrational but I’m hoping for a quick rebound and bought some more shares to lower my average share price. The stock market is definitely not for the faint of heart.
A bit more positive was EA’s announcement that they’re working on Red Alert 3. Last year we got C&C3 which introduced a new faction (the Scrin) and while it was a great game I was hoping that EA would also make a new Red Alert game as I liked Red Alert 2 a lot more than the other Command & Conquer games. A release date isn’t known yet but we do know that C&C: RA3 will introduce a new faction, the Empire (Japan), and will feature naval units. Hopefully EA won’t screw up this game.
Update February 15, 2008: The downfall of NVDA continues. After the -16.32% Valentines Day slaughter the stock dropped another 1.5% to $22.27 today. INTC dropped 1.71% today and overall the NASDAQ index went down by 0.46%. Just like yesterday I took this as an opportunity to lower my average share price. This is probably the last time I’m going to add NVDA stock as I don’t want too put too much money in just one basket but I’m fairly confident that this investment should result in some nice profits over the next couple of weeks/months. NVIDIA posted a net income growth of 57%, provided a good forecast, has no debt, has almost $2 billion in cash, has a good product lineup and is currently trading very cheaply. The P/E ratio is about 14 which is quite attractive. Over the weekend I plan to learn a bit more about technical analysis of stock charts and I’m also going to read up a bit about financial derivates like options.