Nvidia spikes after short seller Andrew Left says he is buyer

Nvidia CEO and president Jen-Hsun Huang.AP Photo / Paul Sakuma

• Short seller Andrew Left’s firm Citron Research said in a tweet on Tuesday that it’s a buyer of Nvidia stock.
• Shares were down as much as 8% before the tweet amid broader market weakness. They’re now up as much as 4% following Citron’s comments.
• Nvidia has been under pressure since the large-cap tech correction began early in October, and following its disappointing brutal third-quarter earnings report last week.
• Watch Nvidia trade live.

Nvidia recovered deep early losses on Tuesday — surging as much as 4% — after short seller Andrew Left’s firm, Citron Research, said it bought the chipmaker’s stock.

Before the mid-morning rally, shares were down as much as 8% amid broader market weakness and as major tech names plummeted into bear market.

“Citron buys $NVDA. This is the first time in 2 years stock offers an appealing risk-reward to investors. $NVDA still a player in AI and Data…will eat through inventory issue. We see $165 before we see 120,” Citron Research said in a tweet on Tuesday.

Nvidia shares have been under pressure since the start of a large-cap tech correction that began in early October. The chip giant also reported brutal third-quarter earnings earlier this month, sending shares down nearly 50% from its all-time high of $292.75, reached on Oct. 1. 

The weaker-than-expected financial results were largely due to an excess of mining GPUs for cryptocurrency, the largest of which, bitcoin, on Tuesday sunk to its lowest level in more than a year.

“Our near-term results reflect excess channel inventory post the crypto-currency boom, which will be corrected,” CEO Jensen Huang said in release following the report. Management in August warned that it’s expecting “essentially no cryptocurrency” business moving forward.

Also at stake is a product transition which will unlikely ramp until next year.

In August, Nvidia unveiled its new graphics cards, which are designed to improve the gaming experience through features like real-time ray tracing. But those new features aren’t yet available because games supporting the high-end graphics cards won’t be released until 2019.

But nearly every Wall Street analyst has still been bullish about the chip giant, saying it’s time to buy the dip as the company has good fundamentals.

“Near-term softness on excess channel inventory, but secular growth in datacenter and gaming still intact,” said JPMorgan analyst Harlan Sur.

William Stein, an analyst at Suntrust Robinson Humphrey, recently made similar comments. 

“Long-term thesis seems intact; Buy the dip,” he said. “Datacenter, Pro-Viz, and Automotive results support our structural growth view.”

Nvidia is now down 25% this year.

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