Nvidia Board Meets on Huang’s Future but Ends Without a Decision as Shares Fall 7 Percent in Premarket
Nvidia’s board met late Wednesday to discuss the future of Chief Executive Jensen Huang but announced no decision. The shares fell in premarket trading on Thursday, trading at $160.82 as of 6:32 a.m., down 7.43 percent from Wednesday’s close of $173.73.
Reuters reported, citing a person familiar with the matter, that the board met late Wednesday. Nvidia declined to comment. Under the company’s bylaws, Huang can be removed with or without cause by a majority of directors. Of the 11 directors, 10 besides Huang are independent.
A search for a successor is already underway. Bloomberg reported that the board has been working with an outside firm to identify candidates and is weighing the appointment of an interim chief executive. Chief Financial Officer Colette Kress has been mentioned as a likely interim choice. Kress has held the finance chief role for more than a decade.
Nvidia has lost about $600 billion in market value this week. The shares closed Wednesday at $173.73, up 2.87 percent, but fell 8.12 percent in after-hours trading after the report that the board was preparing to remove Huang, and the decline continued in premarket trading on Thursday.
Analysts are turning as well. Bernstein cut its rating to market perform from outperform, and Baird moved to neutral. Morgan Stanley removed Nvidia from its list of top picks.
The leadership crisis began on Nov. 8. Huang admitted infidelity in a message to employees, and the board announced an independent investigation the same day. The board said at the time that it had confidence in Huang and his leadership team and had no reason to believe national security or company secrets had been compromised.
The matter escalated on Nov. 11. The New York Times reported that Huang also had a relationship with Kimberly Powell, a vice president of health care who reported directly to him. The Wall Street Journal reported the same day that the board was preparing to remove Huang. Nvidia declined to comment on either report.
The independent review led by Wachtell is continuing. The Journal reported that the Justice Department is now leading multiple investigations involving Alice Huang. Huang has not been charged with any crime. Reports have also said he could face a congressional subpoena if he does not answer a request for a closed-door House briefing on Nov. 18.
The market reaction spread beyond Nvidia. Asian stocks fell, and Alibaba dropped 7 percent. CoreWeave fell 8 percent in after-hours trading on Wednesday to $55.95.
South Korean chip stocks diverged. Samsung Electronics rose 0.97 percent to 208,000 won, while SK Hynix fell 1.80 percent to 1,254,000 won. The Kospi fell 0.6 percent, ending a two-day rally. TSMC closed Wednesday in New York at $413.35, up 4.25 percent, but fell 2.41 percent in premarket trading on Thursday to $403.39. AMD rose 3.1 percent in premarket trading.
The next dates are the Nov. 17 earnings report and the Nov. 18 closed-door House briefing. The market expects earnings per share of $2.53 and revenue of $111.4 billion. The deadline for lead-plaintiff motions in the shareholder lawsuit is Jan. 8.