Citron remains cautious on Nvidia, repeats $200 per share forecast

In a newly published report, Citron Research's Andrew Left said he sees Nvidia (NVDA) "on its way to $200" as "not even ray tracing can support these lofty levels," short interest at an all-time low and datacenter facing major competition. This is not the first time Citron has discussed shorting the stock. Earlier this year, Left also said Nvidia's shares could fall 15% and that shareholders "should be prepared to see $200." 'GOING TO $200': Andrew Left's Citron Research argued in a report published this morning that while Nvidia shares are "acting as if execution risks do not exist," they do and they are "never more apparent than right now." Citron cites 10 reasons why the stock is "on its way to $200," including a valuation that already includes a great company but "ignores risks going forward," competition from well-funded and respected companies like Baidu (BIDU), Alibaba (BABA), Tencent (TCEHY), Facebook (FB), Google (GOOG; GOOGL), Microsoft (MSFT) and Amazon (AMZN), the ongoing shift from GPU to TPU, and Graphcore. Further, the report also cited the hype around Nvidia's Jensen Huang, his change of narrative regarding cryptocurrency, autonomous driving that is not what was expected, a bull case that is now predicated on an upgrade cycle, real time ray-tracing, and short sellers moving to the sidelines. "[Nvidia] remains a victim of its own success with competition mounting from every side. Execution risks are many, and, at peak multiples, [Nvidia's] margin for error is next to nothing," the report added. Citron Research also noted that it sees "many parallels" with Netflix (NFLX). "When [Netflix] optimism was at its peak, we were seeing changes in the media industry that could not be ignored by any long-term investor. [Netflix] was trading around $390 when Citron said the stock would pull back to $340 or lower. As of today, [Netflix] is down almost 20% at ~$329," the report said. WHAT'S NOTABLE: Yesterday, Nvidia's CEO Jensen Huang unveiled the company's new graphics cards that will be used for more sophisticated video games. During a presentation at the Gamescom conference in Germany, the chief executive said that the new GPUs - GeForce RTX 2070 and GeForce RTX 2080 Ti - have been "10 years in the making," according to CNBC. PRICE ACTION: In morning trading, shares of Nvidia have gained about 2% to $252.89.