Why Nvidia Corporation may drop to $130 before rallying
Nvidia Corporation (NASDAQ:NVDA) is trading at $171. This price is 51% lower than the maximum price of $346. The question, however, is whether the stock has bottomed out. We think not.
Nvidia Corporation has forward EPS of $3.78. This puts the PE at 43.54. While it’s not uncommon to find tech stocks with such high PE ratios, the bear market is unforgiving. We think Nvidia will refuse to trade at a PE of 30.
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The whales are already bearish on Nvidia stock. Put options selling the stock at $170 were recorded. It’s unclear how far the whales think the stock might go. We expect Nvidia Corporation to decline until it finds support at $130. At the price, PE would be around 30.
Nvidia will continue lower to find the bottom at $130
Technical analysis shows that the bears still dominate the Nvidia market. This is despite the stock rising slightly over the past two weeks. The MACD and the RSI are bearish. The RSI is at 38. We believe that the RSI needs to drop into the oversold region before the stock can start to rally. This analysis considers that the trend would turn at a price of $130.
Nvidia Corporation is a $171 sale. Investors can wait to catch it at the bottom when the price is near $130. At the projected price, the RSI would be oversold and the PE would show a fairer valuation.
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