Nvidia Shares Drop 7% as Investors Await Outcome for Jensen Huang
Nvidia's board of directors discussed the potential removal of CEO Jensen Huang following reports of his extramarital affairs
On Wednesday, Nvidia's board of directors discussed whether Huang should be removed from his position after reports of his personal relationships with two women. The company's shares fell by 7.2% in premarket trading.
On Sunday, Huang acknowledged that he had an extramarital affair. According to reports, it involved Alice Huang, the head of cloud company Megaspeed. U.S. intelligence agencies consider her a Chinese spy. Another affair was reported with Kimberly Powell, Nvidia's vice president of healthcare, who reports directly to Huang.
Several Wall Street analysts believe Huang's departure could lead to an additional 20% drop in the company's shares. They attribute this to his pivotal role in Nvidia's growth. Over the past month, the company's stock has already lost more than 20%. Bernstein halved its target price for Nvidia shares—from $400 to $200.
Bernstein senior analyst Stacy Rasgon stated that the relationship with a subordinate complicates the board's decision to retain Huang. U.S. lawmakers have also called for his resignation.
Richard Reil, chief investment officer at Questar Capital Partners, views the lack of a succession plan as a problem for Nvidia. In his opinion, the board will have to choose between retaining Huang amid scrutiny or his departure, which would also create uncertainty for the stock.
