Oil’s Big Glo-Up

Nvidia reported its latest quarterly earnings today; its first since the company abandoned its planned takeover of Arm Holdings. Here’s the tl;dr:

Revenue: $7.64 billion, +53% YoY (vs. $7.42 billion estimated)
Adj. earnings per share: $1.18 (vs. $1.23/share estimated.)
Forward Quarter outlook:  Estimating $8.10 billion +/-2%

The chipmaker’s net income topped $3 billion, which is more than double where it was in Q4 2020. Revenue also notched a new record, coming in at $7.64 billion. Cumulatively, that represents a 65.4% margin in the quarter, up 20bps QoQ.

Analysts had been looking for $7.42 billion and $1.23/share. However, they were willing to settle with a slightly lower EPS in exchange for a powerful revenue figure. These figures also make last quarter’s look paltry too. Nvidia posted $7.1 billion in sales in Q3 2021.

The company categorizes its revenue into four silos — gaming, data center, and professional visualization, and automotive & robotics.

Gaming, Nvidia’s biggest silo, represented $3.42 billion, +37% YoY. However, the company’s fast-growing data center business came in just a touch below that — at $3.26 billion, +71% YoY.

The company’s professional visualization biz pulled in $643 million, +109% YoY, to be the company’s fastest and most enterprising sector. Surprisingly, Nvidia‘s automotive & robotics business contracted — down 14% YoY to $125 million. That’s a surprise because more semi companies have been posting record demand from automotive companies,  which would have been expected to otherwise bolster this business.

On the whole, things are still looking up for the semi giant. You can read the full report here.

$NVDA lost 1.8% in after hours.

The world’s “most important oil price”, Dated Brent, topped $100 today. It marked the first time that the measure had notched $100/bbl since 2014. 

For many, $100 oil — and this newfound era of peak oil — has been a long time coming. Oil was hammered during the early days of the COVID pandemic, with some oil contracts even going negative at one point. However, oil is now a far cry from where it was a little less than two years ago.

Dated Brent isn’t representative of oil futures or local prices, but rather, the price of “cargoes bought and sold in the North Sea” according to Bloomberg. However, it sometimes operates as a leading indicator of where futures might go. Futures settled in above $96 on the news, aided in their march to the upside by geopolitical tension in Eastern Europe.

The world’s largest oil companies have been posting monster profits amid the surging market, which shows no signs of letting up.

The government just decided to launch an in-depth investigation of financial institutions for their block trading practices, which is funny because… they’ve been doing it for half a century. 🙄 And retail investors have been calling on the SEC to probe block trading for years.

Block trading has been around since the 1960s. The practice allows institutions to receive a large number of shares (a ‘block’) of a stock directly from a company. The institution then subtly distributes shares from the block to select investors at a premium, which keeps the share price up and prevents the market from figuring out what’s going on. 💀 This kind of transaction is especially prevalent in Silicon Valley and among new ventures. 

But wait, there’s more. Banks participating in block sales send out lists of available shares to families and hedge funds without a public mandate. This is the part of block trading that’s illegal, but difficult to catch because it can be accomplished in such a way that makes it a legal ‘gray area.’ Block sales are a huge problem because they can cause stock prices to plunge, and they allow elites access to high-profile IPOs before anyone else. 

Both the SEC and the Justice Dept. are probing Morgan Stanley and Goldman Sachs for block trading, claiming that it’s possible that these two banks provided insider info to hedge funds. 🔎 We’ll be keeping up with this investigation.