Fake News: Nvidia Stock Didn’t Drop Due to Crypto Bear Market

Fake News: Nvidia Stock Didn’t Drop Due to Crypto Bear Market

The market cap of Nvidia has dropped by more than $23 billion, and analysts were quick to claim that the overnight plunge in the firm’s stock price was caused by an overall drop in demand for crypto.

Susquehanna Financial Group analyst Christopher Rolland said:

Jensen Huang, the CEO of Nvidia, suggested that the struggle of the company was largely affected by the bear market of crypto, stating “the crypto hangover lasted longer than we expected and we were surprised by that, but it will pass.”

Not Affected by Crypto

In the second quarter earnings call held in August, Nvidia firmly emphasized that GPU sales to crypto miners have substantially declined.

At the time, Nvidia CFO Colette Kress said that the company is no longer expecting any contribution from its cryptocurrency-focused venture.

“Our revenue outlook had anticipated cryptocurrency-specific products declining to approximately $100 million, while actual crypto-specific product revenue was $18 million. Whereas we had previously anticipated cryptocurrency to be meaningful for the year, we are now projecting no contributions going forward,” Kress said.

The market has been aware, for more than three months, that the cryptocurrency business of Nvidia has come to an end and that its CFO declared the company is not expecting any additional revenue from crypto-tailored GPU sales.

Still, many reports regarding the $23 billion drop in the market cap of Nvidia were focused on crypto rather than the company’s misjudgment in revenue forecasting, which CNBC Mad Money’s Jim Cramer said was the main factor of the drop.

“Nvidia still makes the best graphics chips, which have become more powerful than traditional microprocessors. It still has a lead over the competition in a lot of uses, although you could argue that AMD’s catching up to them in the data center while Intel rivals them in self-driving vehicles. I think Nvidia made an honest forecasting mistake, although given that some of us saw it coming, it was definitely an avoidable mistake,” Cramer said, adding that the company’s trend was coming from gaming.

Goldman Sachs analyst Toshiya Hari added that the stock price of Nvidia plunged mainly due to its mid-range gaming GPU inventory and a correction in-game console SoCs.

GPU Mining

In the first quarter of 2018, when Nvidia generated $550 million in profit, Bitmain, an ASIC mining equipment manufacturer in the crypto sector, generated $1.1 billion in quarterly profit.

The overall demand for GPU mining has diminished because of the increasing efficiency of ASIC miners and a declining number of miners utilizing GPUs to mine cryptocurrencies.

Most major cryptocurrencies cannot be mined with GPUs due to their explosive rise in hash power over the past two years. It is inefficient to mine a large market cap digital asset with a GPU miner unless a specific kit is built to mine crypto.

The trend of mining has switched from individual miners to mining centers and pools, which gradually led to a decline in interest towards GPU miners.

Images from Shutterstock

18.11.2018 / 15:00 37
Nvidia Enters a Nosedive After an Underwhelming Third Quarter Nvidia Enters a Nosedive After an
Tech company Nvdiahas entered a nosedive after Q3 results reveal an underwhelmingperformance.Nvidia experienced a 19 drop in its stock price. On
“Crypto Hangover” Causes Nvidia’s Stock to Tumble 17% “Crypto Hangover” Causes Nvidia’s Stock
Following a week of widespread carnage in the cryptocurrency markets, traditional retail stocks involved with the crypto sector are feeling the burn
Nvidia Misses Q3 Revenue Target as Cryptocurrency Slump Weighs on Business Nvidia Misses Q3 Revenue Target as
Shares of Nvidia plunged as much as 17 percent in after-hours trading on the Nasdaq Stock Market on Thursday, after the U.S. bitcoin mining equipment
Nvidia Quits Crypto Due to Low Profit, Not Because of Decline in Demand Nvidia Quits Crypto Due to Low Profit,
The world’s largest graphic card and chip maker Nvidia has officially put an end to its crypto venture, with the official announcement of its CFO
Mining Round-Up: Nvidia Shares Drop, College Students Mine on Campus Mining Round-Up: Nvidia Shares Drop,
In recent news pertaining to cryptocurrency mining, Nvidia has witnessed a drop in its share price after announcing an unexpectedly modest earnings
Nvidia Made $289 Million from Cryptocurrency Mining in Q1 Nvidia Made $289 Million from
Nvidia, the world’s largest GPU Manufacturer, posted their earnings call for the first quarter and reported revenue of $3.21 Billion, which was more
Comments (0)
Add a comment
Comment on