Spotlight on… Nvidia

Nvidia reported revenues of $7.19 billion for the first quarter ending 30 April 2023, up 19% from the previous quarter.

The US tech company, which returned US$99m in cash dividends to shareholders during the first quarter of fiscal 2024, saw its share price reach US$401.11 on 30 May, an all-time high, before closing at US$397.70 on 1 June.

With the help of SRP’s StructrPro tool, we analysed how structured products linked to the Nvidia share performed in the US market.

Our sample portfolio comprises 592 structured products linked to the Nvidia share on its own. Of these, 167 are still live and 425 have matured.

Some 164 live products currently provide a gain. As of 26 May, their average return per annum was set at 19.22% with a structured product payoff of 108.43%, against an underlying level of 154.56% and maturity of 0.65-years.

The best live performer is Citigroup Global Markets’ Enhanced Barrier Digital Securities (17331ADL2), a two-year registered note that sold US$183,000 at inception. The product is due to mature on 20 December 2024, returning a fixed contingent coupon of 47% providing the Nvidia stock closes at or above 75% of its starting price. Its spot level on 26 May 2023 was 242.13%.

Another live product that is expected to provide a positive return are the Trigger Jump Securities (36259L576), a joint effort from Goldman Sachs and Morgan Stanley Wealth Management. Its current spot is 308.54% and with a European barrier of 70%, the product is due to mature on 5 September, paying a fixed return of 74.5% if Nvidia closes at or above its starting price.

Three live products are showing a mark to market loss.

Some 391 of the maturing products in our sample provided a gain. Of these, 88 products paid a coupon of between 10% and 12.5%; 81 paid a coupon of between 7.5% and 10%; and 34 paid a coupon of 20% or more.

The highest return came from UBS Financial Services’ Return Optimization Securities (90303L355), which struck on 2 May 2022 at US$195.15. By the time it reached its final observation date (3 May 2023), the share had increased by 45% and since the product offered 300% participation in the rise of Nvidia, this was more than enough to reach the maximum overall return of 141.39%.

Thirty-three of the maturing products returned a loss.

The above chart, which uses StructrPro's market index algorithms shows that the performance of Nvidia's structured products has been broadly in line with the overall structured product universe on the SRP database. However, since January 2023 the value of Nvidia’s portfolio has increased, closing on 158.64% on 26 May, compared to 127.32% for the structured products index. The purple line shows the increase in Nvidia products as the stock becomes a more popular underlying.

The SRP US database lists 205 live structured products worth US$325m that are linked to Nvidia as a single stock. Of these, 43 products (US$91m) had a strike date in 2023.

The StructrPro structured product and lifecycle service provides deep analysis on the US structured products market. It is jointly run by SRP and FVC and covers some 70,000 products issued in recent years.Performance analysis can be seen at an individual product level and on portfolios of multiple products. The application shows results for both matured and live products for any portfolio in the US market.