In its highly-anticipated earnings this week, Nvidia managed to beat the expectations of analysts but not in an overwhelming way that would satisfy investors. The chipmaker’s stock plummeted in the aftermath and caused one strategist to proclaim that the time for selling the company’s shares had already passed.
In a chat with Yahoo Finance, David Bahnsen, the chief investment officer of Bahnsen Group, explained that investors should have liquidated their Nvidia stock holdings back in June when the shares reached their peak.
“About a month ago. Two months ago. Today. Tomorrow,” said Bahnsen when asked about the right time to sell Nvidia stock.
Bahnsen added that his assessment is based on the price-to-earnings ratio, which was 80 in June but has now fallen down to 56. He also reiterated that this isn’t a dig on Nvidia as a company, but rather its stock that is poised to bring less rewards to investors than it has done previously.
“This is not me bashing on Nvidia,” Bahnsen shared. “This is a success story. I’m commenting on the valuation — that when you start paying those prices, the risk-reward skew becomes very unattractive.”
Nvidia’s stock traded at an all-time high of $135.58 per share in June but has since gone down to $117.59 per share. It still remains 144% up year-to-date.