Was Cathie Wood Right to Dump Nvidia Stock Ahead of Weak Guidance?
Cathie Wood's asset management firm, ARK Invest, revealed it sold nearly 300,000 shares of leading chip designer Nvidia (NASDAQ: NVDA) on Tuesday, a day ahead of the earnings update. At first blush, it looks like Wood and her team had the right idea. As previewed a few weeks ago, Nvidia reported a 19% quarter-over-quarter decline in second-quarter revenue to $6.7 billion -- well below previous guidance of $8.1 billion. Even worse, Nvidia said it expects third-quarter revenue to be just $5.9 billion, yet another sequential decline and down from revenue of $7.1 billion in Q3 a year ago.
Nvidia is getting hit with a cyclical decline in sales, and there's no telling how long it will last. Should you follow Wood and sell Nvidia stock yourself?
First, let's acknowledge that ARK Invest's sale of Nvidia stock (worth some $50 million at yesterday's prices) is relative. The two funds that sold -- the ARK Innovation ETF and the ARK Next Generation Internet ETF -- still own sizable amounts of Nvidia. Just over 1% of both funds was allocated to Nvidia stock a day before Nvidia's update for its fiscal 2023 second quarter (a three-month period that ended July 31).
Source Fool.com
