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Why Nvidia Corporation may decline to $130 before rallying

By:
on Jun 25, 2022
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  • Nvidia Corporation at a price of $171 has a PE of 43.
  • The stock will decline to $130 before Nvidia can record support and start rising.
  • Whales are selling at $170 and we think the stock is a sell at the current level.

Nvidia Corporation (NASDAQ:NVDA) is trading at $171. That price is 51% below the peak price of $346. The question, however, is whether the stock has found a bottom. We think not.

Nvidia Corporation has a forward EPS of $3.78. That places the PE at 43.54. While it is not unusual to find technology stocks with such high PE ratios, the bear market is unforgiving. We think that Nvidia will decline to trade at a PE of 30.

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Whales are already bearish on Nvidia stock. Put options selling the stock at $170 have been recorded. It is not clear how low the whales think the stock could go. We project that Nvidia Corporation will decline until it finds support at $130. At the price, the PE would be around 30.

Nvidia will continue declining to find the bottom at $130

Source – TradingView

Technical analysis shows that bears still dominate the market for Nvidia. That is despite the stock gaining slightly over the last two weeks. Both the MACD and the RSI are bearish. The RSI is at 38. We think that the RSI must decline to the oversold region before the stock can begin rallying. This analysis considers that the trend would turn at a price of $130.

Summary

Nvidia Corporation is a sell at $171. Investors can wait to catch it at the bottom when the price is close to $130. At the projected price, the RSI would read oversold, and the PE would show a fairer valuation.