656
Nvidia insists it isn’t Enron, but its AI deals are testing investor faith (www.theguardian.com)
submitted 10 months ago by to c/technology@lemmy.world
100 comments fedilink hide all child comments
you are viewing a single comment's thread
view the rest of the comments
[–] 87 points 10 months ago (11 children)

You can do everything right and still have the curse of investor overconfidence placed on you.

Huang has been complaining for some time that doing well doesn’t result in stock gains, but the actual problem is the stock price is way too high so doing well does nothing for investor expectations.

This is when you sell shares because they no longer have any upside potential.

It sucks for companies though, but the fact is nvidia is overvalued at a 4.5T market cap.

  • permalink
  • fedilink
  • source
  • hideshow 11 child comments
    •
  • [–] 40 points 10 months ago (2 children)

    In some ways the victim of their own success, that's just the way this system is built, for better or worse (mostly worse). The incentives drive the behaviour, but the architecture is hostile in nature, so it's hard to have different outcomes at a certain level. Infinite growth is literal cancer.

  • permalink
  • fedilink
  • source
  • parent
  • hideshow 2 child comments
    •
  • [+] 24 points 10 months ago (6 children)
    [deleted]
  • permalink
  • fedilink
  • source
  • parent
  • hideshow 6 child comments
    •
  • [–] 20 points 10 months ago (4 children)

    The company doesn't care if the stock price hits $1. If the company is paying it's bills, it just continues. It's the people who hold shares that care. The company doesn't hold shares in itself.

    Enron collapsed because the company financials collapsed, not because the stock price collapsed. That happened after all the bad accounting practises and hidden debt came to light. Now, in that case the shareholders succeeded in suing for their losses, but they only had a case because of the mismanagement.

  • permalink
  • fedilink
  • source
  • parent
  • hideshow 4 child comments
    •
  • [–] 16 points 10 months ago (1 child)

    The company absolutely does own shares of itself and it's ability to secure credit and just engage in business in general depends of the value of that holding.

  • permalink
  • fedilink
  • source
  • parent
  • hideshow 1 child comment
    •
  • [–] 3 points 10 months ago

    No. The board can decide to issue more shares, but this is a sub-dividing of the already issued shares and so normally requires a vote from the shareholders. Major shareholders normally sit on the board, so the two groups overlap but are legally distinct.

    If a company buys it own shares, it's normally a "buyback" and the shares cease to exist.

  • permalink
  • fedilink
  • source
  • parent
  • [–] 2 points 10 months ago

    You can't really bail out a stock price though...

    I guess you could provide a guaranteed backstop to sellers and funnel the stock to the government, as Trump seems to love doing, but then you end up with a $3T of over-valued assets that you can't do anything with.

  • permalink
  • fedilink
  • source
  • parent