NVIDIA (NASDAQ: NVDA) is currently on track to double its quarterly revenues in the time span of just 5 quarters, helped along by the incessant tailwind from the ongoing AI rush. Despite the clear price appreciation potential for the stock, the GPU maker's insiders have made no move to buy the stock over the last 12 months. Instead, we've witnessed an unending trickle of sell transactions, with NVIDIA's CEO, Jensen Huang, becoming the latest insider to unload his stock holdings at the current lofty levels.
As illustrated in the snippet above, Huang has sold NVIDIA shares worth $42.828 million since the start of September.
JUST IN: Nvidia CEO, Jensen Huang, has sold shares worth over $42 million in the past week. $NVDA pic.twitter.com/MzQ22Ki1UW
— WhaleWire (@WhaleWire) September 7, 2023
The above tweet provides a granular view of these transactions.
For the benefit of those who might now be aware, NVIDIA recently reported $13.51 billion in quarterly revenue, with the company's data center segment accounting for $10.3 billion in sales. The real shocker, however, has been NVIDIA's blowout guidance, with the company now expecting $16 billion (plus or minus 2 percent) in sales for Q3 2024. For reference, consensus expectations for the quarter's revenue were pegged at just $12.61 billion before the latest earnings release.
Since that initial euphoric moment immediately following the company's latest earnings release, NVIDIA's shares have struggled to breach the critical resistance at the $500 price level. For more insight into the technicalities, head over to this post.
NVIDIA $NVDA filed its last quarter's Form 10-Q today. If you have been as surprised by the share price action and the (unaudited) published financials as I have been, this thread is for you.
Let's get into it
— Kashyap Sriram (@kashyap286) August 28, 2023
Of course, an accounting controversy has played its role well in ushering in a modicum of caution. As explained in the above thread, NVIDIA recognizes its product sales upon shipment but licensing and services revenues, including those derived from data center sales, are recognized when the associated costs are incurred. In the last quarter, almost all of the excess revenue that the company disclosed came from data center sales. Predictably, given the fact that most of the data center sales for the quarter had not materialized by the end of Q2, NVIDIA's accounts receivables increased by 73 percent on a sequential basis. The troubling aspect here is that NVIDIA's sales increased by 88 percent on a sequential basis. What's more, after accounting for a pre-payment, the company's receivables actually increased by 104 percent from Q1 to Q2. There is an alleged mismatch here as costs are not rising in tandem with the company's revenue.
That $NVDA call gamma at 500 is something to behold.
h/t @spotgamma equity hub. pic.twitter.com/U9gNjyHxkx
— Pod Caste (@traderpodcaste) August 30, 2023
While this accounting controversy is dampening the euphoria in NVIDIA shares for the moment, it remains to be seen how long the current cautionary regime persists. Do note that there is a massive call wall at the $500 price level that is also playing its part in withholding the stock's rise (check the above tweet).
Do you think NVIDIA is preparing for a massive upthrust after the current consolidation? What are your views on the company's accounting treatment for different revenue streams? Let us know your thoughts in the comments section below.
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