In recent weeks NVIDIA Corporation (NVDA) shares have taken a hit. Even today when the market overall is moving up NVDA is going in opposite direction.
Searching through the web I can't seem to find a good reason why this is the case. So given that I like this company I am opening a new trade in NVDA. This one is a bit risky but profit potential is high. Worth taking the rick I guess.
Sold 5 put options with January 2007 expiration date.
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3 comments:
NVDA trading at high valuation relative some of the other chip companies. The stock has doubled over the past year and may sit a rally or two out. Long term I like this stock as well, but im waiting for a better price.
why do you say that nvdia is risky? granted all investments have some factor of risk. I think that nvdia is well poised right now and will continue to grow because:
1. they bought PortalPlayer, which does graphics processing for a slew of cell phones and handheld devices including the current version of apple's ipod. they got booted by samsung for the iphone and the next version of the ipod but apple's production on the next version of the ipod is delayed so until the end of Q2 and even into Q3, since the new ipod is now scheduled to be relased in the fall (just before christmas) nvdia will be providing chips to apple for the current ipod. that gives nvdia 5+ months to replace the revenue from the loss in ipod chip sales once apple ceases production of the current ipod model and 5-8 months before the decrease in revenue is actually reported to the street.
2. speaking of replacing revenue, windows vista will require high-end graphics cards just to function. MS will be pushing updates out soon, sending all the PC owners back to the store for a new PC/graphics card -- this should fuel nvida's sales over the next 2 quarters and continually going forward.
3. nvidia's primary competition ATI, was just acquired by AMD. ATI will not be operating at full capacity since they will be diverting resources to dealing with integration from a company perspective as well as physical integration of ATI's technology into AMD's chips.
4. nvidia is ramping up on it's branding and marketing, which does not translate directly to a figure on a financial statement but it should indirectly help sales....all those people who see that little green logo when their cell phones boot up will recognize it when they go to buy a PC.
5. pure speculation but intel is better off acquiring nvidia than spending gobs of money to figure out what nvidia already knows how to do and do well. nvidia was not against the idea of an acquisition since they were in talks with AMD before AMD decided to go with ATI. intel's acquisition of nvidia would be for oneupmanship on AMD, of course...
Thanks for the nice post.
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