 When it comes to growth stocks like NVIDIA you can have a growing business a rising price and A price that is getting ahead of that growing business. Let's look at the charts We have here in NVIDIA and this might be an important week because some are saying there's rejection Around that nine hundred to a thousand level if that's the case Maybe Momentum traders people who buy because other people are buying they might be taking profits If they take price profits the guys who will step in to support the stock will be the value buyers The people who want the business and want to own the business for a long time now Sometimes there's a gap between the momentum traders and the value buyers and that could be a problem For anybody trading or investing in NVIDIA Here I have some fundamental data. This is the data that the value investors will be looking at If we look at price to sales Historically, and I'm zooming out quite a bit When it's down in the dumps, it's been two times sales or two times revenue and In 2007 when it topped out it was six times revenue Well, right now we are trading at 35 times revenue So there is a lot of optimism a lot of growth being priced in into NVIDIA now The revenue has increased, but it hasn't increased at the same Magnitude that the stock has the revenue has gone from something like almost 6 billion to 22 billion per quarter, but The stock has gone from a hundred something to as high as 900 something. So that's nine times versus three times Is the revenue really gonna keep up with the price action? That's the question any trader an investor has to think about When it comes to NVIDIA if we look at Tesla, there's a good lesson there Tesla had a lot of growth Anticipated and then it cooled off for some reason Revenue never stopped growing it kept rising If we look at revenue From 2020 and on it's kept going up. So that's great for the business However, the price to sales went from at its peak 31 32 times revenue 32 times sales and it's cooled off. Now. Why is that? It's because the optimism multiple compressed and as it grew in investors repriced the whole business the stock is down from 410 and it went down to 106. Why is that if the revenue has been growing? Why did the price come down? It's because reality set in and this went from a momentum trade to a value trade you have to be very careful when you're trading momentum stocks because Price discovery means we're gonna find out what it's really worth eventually when the trade That the trend is up. It doesn't really matter until that the trend changes and then it does matter So when everybody gets stopped out the value investors are the ones that pick up the stock so very important to understand the business and If you're not gonna do the work on the business just have a stop and know that Eventually the party will be over and the real investors are the ones that are going to support a stock Because they want to own the actual business Not just trade all those green bars Let me know what you think in the comments