Nvidia stock falls 6% as investors await Jensen Huang's fate
Nvidia shares fell more than 6% in premarket trading on Thursday after the board met to discuss whether to remove Jensen Huang as CEO, with Bernstein halving its valuation of Nvidia to $200.
The board met, the stock fell
Nvidia shares fell on Thursday after the company's board met to decide whether to remove Jensen Huang as chief executive, following reports that he has had two extramarital affairs. CNBC confirmed the board met on Wednesday, and no decision had been announced.
The stock was down 6.3% in premarket trading as of 4:34 a.m. ET, at $163.04 — down $10.69, or 6.15%, from Wednesday's close of $173.73, when the shares had risen 2.87%.
Two affairs, one board decision
On Sunday, Huang admitted to having an affair. He was romantically involved with Alice Huang, an executive at the cloud company Megaspeed, according to the Financial Times; U.S. intelligence officials believe she is a spy for China. The two are not related.
The New York Times reported on Wednesday that Huang had another extramarital relationship with Kimberly Powell, Nvidia's vice president of health care, who reports to him. The board opened an independent investigation, and U.S. lawmakers have called for Huang's resignation.
- Premarket fall6.3% as of 4:34 a.m. ET
- Premarket price$163.04, down $10.69
- Wednesday close$173.73, up 2.87%
- Bernstein valuation$200, cut from $400
- Fall over the last monthMore than 20%
Wall Street turns
Several Wall Street analysts told CNBC that if Huang is removed, the stock could fall a further 20%, given how central he has been to Nvidia's success. The shares are already down more than 20% over the last month.
Bernstein on Thursday halved its valuation of Nvidia, cutting it to $200 from $400. Stacy Rasgon, a senior analyst at Bernstein, told CNBC's "Squawk Box Asia" that Huang's alleged affair with a direct report means it is "much tougher for the board to leave him in position." Richard Reyle, chief investment officer at Questar Capital Partners, said the lack of a succession plan makes the stock "uninvestable."
Rivals gain as chips split
Shares of Nvidia rivals AMD and Broadcom were up 3.9% and 3%, respectively, in premarket trading, while Intel, Marvell, Arm and Qualcomm were all trading lower.
Huang has been central to Nvidia's rise since he co-founded the company in 1993, transforming it from a gaming hardware maker into the company at the center of the artificial intelligence boom. Rasgon said it is unclear who could be the "visionary" to lead Nvidia into the future. "Jensen is Nvidia, right? He is the visionary," Rasgon said. "Who is the right person now to make the decisions for the next 10 years? I don't intuitively know who that person would be."
