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I'm all for the post, but are we really attempting to add logic to stock prices? The price of NVDA stock does not correlate with any sort of logical math, this

I'm all for the post, but are we really attempting to add logic to stock prices? The price of NVDA stock does not correlate with any sort of logical math, this plus this = stock price type of equation. Stock prices are entirely based on what people think they are worth.

what_ever 3y ago
What bs. And how do people think a stock is worth? There is no logic in that?
- slt2021 3y ago
  momentum investors (or hype investors, of which there are many) don't care about the current price, as long as chart is going up and to the right
  - thunky 3y ago
    There is some intrinsic value in a stock, but since it is based on future unknown values it's impossible to know or predict. So yes, that makes it possible for the price to become disconnected from any reasonable prediction.
    - deleted 3y ago
      [deleted]
    - slt2021 3y ago
      there is also a secondary market for options - where investors trade volatility, and use stock as instrument to trade volatility and express their view. if volatility is priced at a bargain, investors doesnt care much about the stock, as he will be hedging his delta exposure anyways by means of dynamic hedging/etc
mfitton 3y ago
Does it not? Given their current profits, we would expect 25b in rolling year profits. Their market cap is 1.2t. Apple, with about 80b in rolling year, has a market cap of 2.8t Given the kind of revenue and profit growth forecast NVDA has given, these numbers don't seem terribly far off. Worth noting that NVDA's profits 8xed in a single year. A lot of people are basing their NVDA valuation based on the past year's revenue, which does make them look extremely overvalued. However, if NVDA has enough sales and enough of a moat to double their profits again, suddenly they'll be biting at Apple's heels profit wise with a much lower valuation. It doesn't seem like a totally crazy valuation to me, despite the uncertainties involved.
qwytw 3y ago
I don't necessarily agree. > Stock prices are entirely based on what people think they are worth. Are are priced on what people think they might be work in the future current financial figures don't really matter that much compared to growth. And the market is pricing in extremely high revenue growth (and also very high margins). So far Nvidia seems to be delivering. Their forward PE went down several times and it's now "only" 30. A few more quarters like that and the current stock price might seem cheap even by traditional standards. Obviously it's a risky bet but I don't see what's illogical about it?

what_ever 3y ago

What bs. And how do people think a stock is worth? There is no logic in that?

slt2021 3y ago
momentum investors (or hype investors, of which there are many) don't care about the current price, as long as chart is going up and to the right
- thunky 3y ago
  There is some intrinsic value in a stock, but since it is based on future unknown values it's impossible to know or predict. So yes, that makes it possible for the price to become disconnected from any reasonable prediction.
  - deleted 3y ago
    [deleted]
  - slt2021 3y ago
    there is also a secondary market for options - where investors trade volatility, and use stock as instrument to trade volatility and express their view. if volatility is priced at a bargain, investors doesnt care much about the stock, as he will be hedging his delta exposure anyways by means of dynamic hedging/etc

mfitton 3y ago

Does it not? Given their current profits, we would expect 25b in rolling year profits. Their market cap is 1.2t. Apple, with about 80b in rolling year, has a market cap of 2.8t Given the kind of revenue and profit growth forecast NVDA has given, these numbers don't seem terribly far off. Worth noting that NVDA's profits 8xed in a single year. A lot of people are basing their NVDA valuation based on the past year's revenue, which does make them look extremely overvalued. However, if NVDA has enough sales and enough of a moat to double their profits again, suddenly they'll be biting at Apple's heels profit wise with a much lower valuation. It doesn't seem like a totally crazy valuation to me, despite the uncertainties involved.

qwytw 3y ago

I don't necessarily agree. > Stock prices are entirely based on what people think they are worth. Are are priced on what people think they might be work in the future current financial figures don't really matter that much compared to growth. And the market is pricing in extremely high revenue growth (and also very high margins). So far Nvidia seems to be delivering. Their forward PE went down several times and it's now "only" 30. A few more quarters like that and the current stock price might seem cheap even by traditional standards. Obviously it's a risky bet but I don't see what's illogical about it?