Nvidia Plummets 4.09% Amid CEO's Massive Stock Sell-Off and Regulatory Scrutiny
Friday, Sep 6, 2024 6:33 pm ET
1min read Nvidia (NVDA) fell 4.09%.
Recent filings with the U.S. Securities and Exchange Commission (SEC) revealed that Nvidia CEO Jensen Huang sold 240,000 shares of Nvidia common stock between August 30 and September 3, with prices ranging from $107.30 to $120.99 per share, accumulating approximately $27.6 million in proceeds.
According to SEC documents, Huang began offloading his Nvidia shares on June 13 and continued throughout the summer, averaging sales of about $14 million per day. Specifically, Huang sold nearly $170 million worth of shares in June, $323 million in July, and approximately $116 million to date in August, totaling over $600 million.
Huang still retains around 76 million Nvidia shares. His stock sale plan was disclosed in March, where he indicated an intention to sell up to 600,000 shares by the end of March 2025 as part of a 10b5-1 trading plan.
Huang's sales are within the scope of the 10b5-1 plan, a prearranged trading plan that allows insiders of publicly traded corporations to sell a predetermined number of shares at specified times, thus avoiding accusations of insider trading.
In the AI-driven chip market, Nvidia’s stock had surged by 115% year to date, even after a recent sharp decline. However, its price showed a decrease from a record high of $140.76 in June to slightly above $106, reflecting a broader market sell-off.
Nvidia has seen outstanding revenue growth, particularly within its data center business, which reported a record revenue of $26.3 billion last quarter—a 154% year-over-year increase, though still lower than the previous quarter's 427% growth.
Market analysts suggest that while Nvidia has surpassed profit expectations over several quarters, future revenue growth is likely to decelerate. Despite this, Nvidia traded approximately 68 times its diluted earnings per share as of Tuesday's close.
Huang's substantial stock sales have triggered concerns about negative signals to investors, possibly indicating an AI bubble nearing its peak and Nvidia’s stock reaching an unsustainable level. Nevertheless, historical precedents with other large companies show that significant stock sales by insiders do not necessarily mark a peak in stock prices.
Nvidia’s stock decline over the past three months, down by about 11%, coincides with heightened regulatory scrutiny. Reports have surfaced that the U.S. Department of Justice issued a subpoena to Nvidia, probing whether the company leveraged its dominance in the AI chip market to stifle competition.
Analysts believe Nvidia's short-term stock may remain under pressure, but its technical prowess and market position are expected to provide long-term support. Investors will be closely watching how Nvidia addresses these regulatory challenges and manages its growth trajectory in the evolving AI sector.
Recent filings with the U.S. Securities and Exchange Commission (SEC) revealed that Nvidia CEO Jensen Huang sold 240,000 shares of Nvidia common stock between August 30 and September 3, with prices ranging from $107.30 to $120.99 per share, accumulating approximately $27.6 million in proceeds.
According to SEC documents, Huang began offloading his Nvidia shares on June 13 and continued throughout the summer, averaging sales of about $14 million per day. Specifically, Huang sold nearly $170 million worth of shares in June, $323 million in July, and approximately $116 million to date in August, totaling over $600 million.
Huang still retains around 76 million Nvidia shares. His stock sale plan was disclosed in March, where he indicated an intention to sell up to 600,000 shares by the end of March 2025 as part of a 10b5-1 trading plan.
Huang's sales are within the scope of the 10b5-1 plan, a prearranged trading plan that allows insiders of publicly traded corporations to sell a predetermined number of shares at specified times, thus avoiding accusations of insider trading.
In the AI-driven chip market, Nvidia’s stock had surged by 115% year to date, even after a recent sharp decline. However, its price showed a decrease from a record high of $140.76 in June to slightly above $106, reflecting a broader market sell-off.
Nvidia has seen outstanding revenue growth, particularly within its data center business, which reported a record revenue of $26.3 billion last quarter—a 154% year-over-year increase, though still lower than the previous quarter's 427% growth.
Market analysts suggest that while Nvidia has surpassed profit expectations over several quarters, future revenue growth is likely to decelerate. Despite this, Nvidia traded approximately 68 times its diluted earnings per share as of Tuesday's close.
Huang's substantial stock sales have triggered concerns about negative signals to investors, possibly indicating an AI bubble nearing its peak and Nvidia’s stock reaching an unsustainable level. Nevertheless, historical precedents with other large companies show that significant stock sales by insiders do not necessarily mark a peak in stock prices.
Nvidia’s stock decline over the past three months, down by about 11%, coincides with heightened regulatory scrutiny. Reports have surfaced that the U.S. Department of Justice issued a subpoena to Nvidia, probing whether the company leveraged its dominance in the AI chip market to stifle competition.
Analysts believe Nvidia's short-term stock may remain under pressure, but its technical prowess and market position are expected to provide long-term support. Investors will be closely watching how Nvidia addresses these regulatory challenges and manages its growth trajectory in the evolving AI sector.
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