💪 Nvidia beats again

and investors need to be careful

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Good morning investors! The market took a break yesterday as most sectors fell.

Today we cover:

  • Too early to celebrate?

  • Nvidia beats again

  • Stocks fall

📊 Economy and News 

Too early to celebrate?

Warning Watch Out GIF by Law & Order

Gif by nbclawandorder on Giphy

The rapid resurgence of market confidence after a sharp global decline in high-risk assets should be viewed with caution, according to Goldman Sachs' head of asset allocation research.

Christian Mueller-Glissmann from Goldman Sachs suggested that the early August stock market downturn could be interpreted as a "warning signal."

On August 5, the S&P 500 fell by 3%, marking its largest single-day decline since 2022.

However, since that time, the anticipation of near-term interest rate cuts from the Federal Reserve and positive U.S. economic indicators have driven a strong rally in stocks. The S&P 500 has surged by 8% since August 5, while the Dow Jones Industrial Average has risen by over 6%.

Global hits:

Indian deals: Apple is tying up with India’s Bharti Airtel to offer the telecom firm’s premium customers its music and video streaming services for free, giving the U.S. giant access to thousands of consumers in the world’s most populous nation.

On the other hand, Walt Disney Co and Reliance Industries won approval on Wednesday for an $8.5 billion merger of their Indian media assets after assuaging regulatory worries about their grip on broadcasting rights for cricket, India’s favourite sport.

CrowdStrike will pay: Cybersecurity firm CrowdStrike, which sparked a global computer outage in July through a flawed software update it sent to customers, said Wednesday it anticipates it will give those affected customers about $60 million in credits for the rest of this year as compensation for the trouble it caused.

📈 Stocks

S&P 500 5,592.18 (-0.60%)
DJIA 41,091.42 (-0.39%)
NASDAQ 17,556.03 (-1.12%)
BRENT CRUDE 78.65 (-1.13%)
* Prices as of Aug 29th, 12:20 AM UTC

Nvidia beats, again yet falls

Nvidia released its earnings after the market close, surpassing Wall Street's forecasts for both earnings and future outlook, and offered better-than-anticipated guidance for the upcoming quarter.

Nvidia shares fell nearly -6% in extended trading.

Here are the results.

  • Earnings per share: 68 cents adjusted versus 64 cents per share expected by LSEG.

  • Revenue: $30.04 billion versus $28.7 billion expected by LSEG.

Nvidia projected current quarter revenue to reach around $32.5 billion, exceeding analysts' expectations of $31.7 billion as reported by StreetAccount.

The company reported net income of $16.6 billion for the quarter, or $0.67 per share, compared to $6.18 billion, or $2.48 per share, in the same period last year.

Nvidia's market value has increased more than ninefold since the end of 2022 and has risen 34% since its last earnings report.

The chipmaker's revenue continues to soar, with a 122% annual increase during the quarter.

Nvidia's data center division, which includes its AI processors, saw a 154% year-over-year revenue jump to $26.3 billion, representing 88% of the company’s total sales and surpassing StreetAccount’s estimate of $25.24 billion.

Nvidia’s gaming division, once the company’s main focus, grew its revenue by 16% from the previous year to $2.9 billion, beating StreetAccount's estimate of $2.7 billion.

Nvidia also announced a $50 billion share buyback authorization.

And those who fell

  • Shares of Super Micro fell -23% on Wednesday after the company announced it will not file its annual report for the fiscal year on time. Hindenburg Research disclosed a short position in the company on Tuesday, alleging “fresh evidence of accounting manipulation.” Analysts at JPMorgan said they think Hindenburg’s report is “largely void of details around alleged wrong doings from the company.”

  • Abercrombie & Fitch handily beat Wall Street’s expectations as the apparel company posted another quarter of torrid growth. Despite the strong results, CEO Fran Horowitz pointed to an “increasingly uncertain environment” as macro conditions worsen. The longtime mall retailer is seeing gains in its Hollister brand and international markets. The report sent the stock down -15%.

  • Foot Locker beat Wall Street’s estimates on the top and bottom lines as it posted comparable sales growth for the first time in six quarters. The sneaker company also saw its gross margin expand for the first time in more than two years. CEO Mary Dillon told CNBC Foot Locker is exiting a number of international markets and moving its headquarters from New York City to Florida. The report sent the stock down -12%.

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💵 Personal Finance

Exit strategies in stocks - Part I

We often encourage people to invest but it isn’t the most important thing, you also need to know when to stop investing and sell. Also known as taking profits (hopefully) or cutting your losses, or exiting. 

Exit strategies represent the pathways through which investors can realize their returns on investments in stocks and walk away. Let's delve into some of the most common exit strategies:

  1. Setting Price Targets: Determine the price at which you plan to sell your stock. This can be based on a specific price target you've set in advance, fundamental analysis, technical analysis, or a combination of these factors. When the stock reaches your target price, consider selling some or all of your holdings. This is the most popular strategy to make money off stocks because prices will go down after a point. It’s all about recognizing and benefitting from that point.

  2. Stop-Loss Orders: Implement stop-loss orders to limit potential losses. A stop-loss order is a predefined price at which your stock will automatically be sold if it falls to that level. This strategy helps protect your capital by preventing significant losses in case the stock's price declines. Again, this is important because prices will go down after a point. No stock only goes up. However, as we have mentioned in previous newsletters, stocks will always end up going higher (eventually) unless it’s a dead horse. So, a lot depends on how much time you have in hand.

  3. Trailing Stop Orders: A trailing stop order allows you to set a percentage or dollar amount below the current market price. As the stock's price increases, the trailing stop automatically adjusts, locking in profits. If the stock price drops by the specified percentage or dollar amount, the trailing stop order triggers a sale.

  4. Time-Based Exit: Set a specific time frame for holding your stocks. For instance, you might decide to hold a stock for one year, and at the end of that period, reevaluate its performance and your investment goals. If the stock hasn't met your expectations, consider selling it. This strategy can, however, be a little risky but it works in situations where you expect a company to pull something off within a specific time. For example, if you are invested in a pharma company that promised to release new drugs by 2027, you can decide to sell in 2028 to benefit from the new drug.

Check tomorrow for more ways in part II of this guide.

💰 Be a Better Investor

Do not save what is left after spending, but spend what is left after saving.

Warren Buffett

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Nothing in this newsletter is financial advice. Always do your own research and think for yourself.