One of the best-performing and most-discussed stocks of 2024 – the semiconductor giant Nvidia (NASDAQ: NVDA) – has hit a rough patch in recent trading. Specifically, after climbing to highs near $150, NVDA shares crashed to their press time price of $130.28.
In fact, the decline has been so significant that Nvidia stock is, at press time on December 20, 0.38% in the red in the six-month chart.
One Wall Street analyst, GJL Research’s Gordon Johnson – otherwise best known as one of Tesla’s (NASDAQ: TSLA) biggest bears – believes that the downturn is far from over and that NVDA will see a further fall in the Friday session.
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Why Johnson believes the Nvidia downtrend is artificial
According to Johnson, Nvidia’s stock price is being manipulated by using recently approved products such as Zero Days to Expiration (0DTE) options.
The analyst believes that the stark break from the three-year averages in the 1-month 25-delta put strike volume and call strike volume showcases there is significantly more demand for puts than for calls and, thus, that there is strong and artificial downward pressure affecting NVDA.
Gordon Johnson also linked this phenomenon to the market maker’s need to cover their positions and highlighted that it is simultaneously not how the U.S. stock market is intended to operate and that it has an outsized importance for equities due to Nvidia’s size and prominence.
In an attempt to explain how unintended and inorganic traffic can have such an impact, the analyst added that the responsible regulator – the Securities and Exchange Commission (SEC) – ‘is virtually non-existent.’
Most experts foresee a continued NVDA stock rally
Elsewhere, and perhaps showcasing that despite being implicitly bullish about Nvidia, Johnson remains something of a contrarian, few agree that the semiconductor giant is headed lower.
For example, on December 20, Morgan Stanley reiterated that, despite the current turmoil, it still considers NVDA shares a ‘Top Pick’ for 2025 with an ‘overweight’ – ‘buy’ rating and a $166 12-month price target – 27.42% above Nvidia price today.
Other recent price target reassessments – such as that provided by Citi – were similarly positive. Finbold reported on December 15, the investment bank and financial services company estimates the semiconductor stock will climb to $175 in 2022 and is considered a ‘buy’ with massive upside potential.
