Benzinga’s PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.
On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.
There are several reasons why it has not been a good idea to be short NVIDIA Corporation (NASDAQ: NVDA) over the last few years.
One catalyst surrounding the issue over the last few months: a potential stock split. Before the open Friday, a 4-for-1 stock split was announced, and the corresponding price action makes it the PreMarket Prep Stock of the Day.
Nvidia More Than Doubles Off March 2020 Low: After ending 2019 at $235.30, Nvidia went on to make a new all-time high in February 2020 at $316.32 and them cratered with the broad market.
It bottomed in March 2020 at $180.63 and began to rebound.
That low coincided with a pair of daily lows from Oct. 9, 2019 ($179.16) and Oct. 10, 2019 ($180.14). Once the issue cleared its former all-time high in May 2020, the pace of the rally accelerated. Its all-time high was not made until April of this year at $648.57.
From the March 2020 low to the April 2021 high, that marked a return of 269%.
Nvidia During The Tech Retreat: Nvidia was not spared in the growth tech/high PE selloff over the last two months.
Although its forward price/earnings ratio of 42 is not outrageous, Nvidia is certainly well above the price/earnings of other value stocks that were the fancy of Wall Street during the latest violent rotation.
It should be noted that the issue bottomed in April at $540.45 and just undercut that low in April, falling to $538.35, and staged a rebound. The high for the current rally was made earlier in Friday’s session at $608.88.
Nvidia Split Mania: Any inventors who witnessed the price action in Tesla Inc (NASDAQ: TSLA) and Apple Inc (NASDAQ: AAPL) recognize that the announcement of a stock split can be a powerful catalyst.
Although it does not change the fundamentals of a company in any way whatsoever, the appeal of a lower stock price makes it more appealing to novice investors.
Nvidia’s Price Action, PreMarket Prep’s Take: The announcement was discussed live on Friday’s PreMarket Prep show. Co-host Dennis Dick caught the headline and the price action was dissected. As expected, the issue caught a major bid that did not end until it was nearly $25 higher when the stock peaked at $610.37.
The author of this article noted that the high coincided with its May 3 high ($609.87), and this was a must-clear level in order for the rally to continue.
After a higher open, Nvidia rallied but failed ahead of those highs at $608.88 and reversed course. The stock was up 2.01% at last check at $596.27.
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