Stocks pairs trading: NVDA vs TSLA

15 июл.

Let's examine the trade potential for NVDA and TSLA by analyzing their key financial metrics and recent performance to determine reasons for going long on NVDA and short on TSLA.

Profitability Metrics:
NVDA: ROA of 70.10%, ROE of 115.66%
TSLA: ROA of 13.93%, ROE of 24.28%

NVDA demonstrates superior profitability metrics, reflecting efficient management and higher returns on both assets and equity compared to TSLA.

Performance Metrics:
NVDA: Perf Year of 179.65%, Perf YTD of 159.63%
TSLA: Perf Year of -7.01%, Perf YTD of 4.00%

NVDA's performance metrics significantly outperform TSLA, highlighting its strong market momentum driven by advancements in AI technology and strategic partnerships.

Recent News Highlights:

NVDA: Recently announced new AI and graphics products, and partnerships with companies like XPENG and MediaTek. Their Q2 fiscal 2024 results showed a substantial increase in revenue and operating income, bolstered by growth in AI and data centers​

TSLA: Facing operational challenges and competitive pressures. Recent earnings reports highlighted a decrease in EPS Q/Q by 53.71%, and sales Q/Q dropped by 8.69%, indicating potential headwinds​

Decision:

Long on 2 NVDA
Short on 1 TSLA

By focusing on NVDA’s superior growth prospects, profitability, and market performance, coupled with TSLA’s current operational challenges, this strategy aims to capitalize on NVDA's strengths while hedging against potential declines in TSLA.