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Nvidia, Nordstrom Plummet On Disappointing Earnings, Poor Forecast

With earnings season drawing to a close, there was more of the disappointment that has marked much of what was supposed to be a stellar reporting period, when two hedge fund and retail darling stocks, first Nordstrom then Nvidia, plunging on disappointing earnings and weak outlooks.

Department store giant Nordstrom reported Q3 EPS of $0.39 which was a huge miss to expectations due to what the company said was a charge of 28 cents, on revenue of $3.75BN, above the estimate of $3.69BN. Comparable stores rose 2.3%, missing estimates of 2.4%, but the big surprise was the company's gross margin which at 33.3% was well below consensus estimates of 34.2%.

Looking ahead, Nordstrom forecast adjusted EPS for the full year of $3.55-$3.65 with the midpoint missing the average analyst estimate of $3.63. The company also forecast full year net sales of $15.5-$15.6BN, which also missed the sellside estimate of $15.9BN.

After reporting its disappointing Nordstrom plunged as much as 13% post-market with traders focusing on the disappointing 3Q gross margin which trailed analyst estimates, and underscored similar "peak margin" woes as other peers.

Norstrom shares had been up 25% this year through today’s close, while the retail index gained 21%. The company is not alone: the S&P 500 Retailing Index earlier extended losses to a fifth session as disappointing results and gross margin commentary from retailers like Macy’s weighed on the sector.

Elsewhere, Nvidia also tumbled after the biggest maker of chips for computer graphics cards gave a weak sales forecast for the current quarter, showing the lingering loss of demand from the collapse of cryptocurrency mining.

The company reported Q3 revenue of $3.18BN, 1.9% below the $3.24BN consensus estimate resulting in EPS of $1.84, also missing the $1.92 consensus estimate as the company's adjusted gross margin of 61% disappointed, printing below the 62.8% consensus.

The biggest shock was the company's guidance: revenue in the Q4 will be only $2.7 billion, plus or minus 2 percent, the Santa Clara, company said, badly missing the average analysts’ estimate of $3.4 billion.

The stock plunged 15% after hours, and has dropped 30% since its peak a month and a half ago, reflecting concern that earnings weren’t keeping pace with the huge gains in the stock. Investors had piled into Nvidia bidding it up from $12 in 2012 to a closing high of $289.36 on Oct. 1. It closed today at $202.39, and was trading at $170 after hours, not only giving up all YTD gains, but trading at the lowest price since September 2017.