Stocks: The Good, The Bad and The Ugly

Earnings reactions, good and bad calls and holy Nvidia

Good morning,

This week we are looking at:

• Notable earnings reactions

• Good and Bad recent calls

• Green shoots in the energy sector

• and more

However, first, we need to address Nvidia.

Nvidia reported blowout numbers after yesterday’s close, the highlight of which appeared to be guiding revenue 53% above the consensus forecasts. As I write this Wednesday evening, the conference call has concluded and the stock is hovering at $381, about 25% above Wednesday’s close.

Here are some key stats to know:

• As of Wednesday, NVDA had a $755B market cap, closing the day at $305.38/share.

• The stock only needs to gain 13.5% today to hit a new record high.

• A gain of 25% would be $188B in additional market cap, more than the current value of Nike, the 35th largest stock in the S&P 500.

• At a 25% gain, Nvidia alone would contribute +55 basis points to the S&P 500’s move today.

• If NVDA can close above $382.65 (a hair more than a 25% gain) it will surpass the record for the largest one-day market cap gain in history. That record is currently held by Amazon following its 14% gain back in February 2022.

• The stock needs to gain just 32.5% (cross $404.63/share) from Wednesday’s close to become the first trillion-dollar chip stock.

• Nvidia’s 2022 closing low was $112.27 on October 14. Assuming a 25% gain today, the stock will be up 240% from those lows in just over 7 months.

Finally, on an anecdotal basis, I will just point out how remarkable this move is in comparison to Amazon’s current record-holding move. Nvidia was already extremely overbought coming into this report, which makes it all the more impressive. On the other hand, Amazon had fallen 25% in the 3 months prior to its jump, and the 14% gain didn’t even get the stock over its 50-DMA. The stock would go on to undercut those lows just 5 weeks later and ultimately get cut in half later in the year.

Now let’s see those charts!

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Earnings movers this week

Holy Nvidia

Not much to say here. The stock is of course even more overbought, and while you won’t catch me buying the stock here, I’d sooner do that than short it. First support is the previous record high at $346.

Zoom finding support at the IPO price

ZM fell about 10% on Tuesday following its earnings report, but the stock is still above the $60 level where it has found support numerous times. This is a bad chart and a bad trend. But as a trade, taking a stab here with a stop at $60 is interesting to me.