Nvidia's stock is plummeting amid a scandal involving CEO Jensen Huang. Analysts predict that if Huang were to leave the company, the stock could drop by more than 20% due to concerns over management instability and succession uncertainty.
According to the New York Stock Exchange, Nvidia's stock fell more than 9% in after-hours trading on November 11, closing at $158.78, down 8.6% from the regular session.
The decline began after it was revealed on November 8 that Huang was allegedly involved in an affair with Alice Huang, a Chinese national suspected of being a spy. This news caused Nvidia's stock to drop nearly 10% over two days, wiping out approximately $470 billion in market capitalization.
Although the stock rebounded slightly on November 11, it fell again in after-hours trading following a report by The New York Times that Huang was also involved with another company executive. This has heightened market concerns about the possibility of Huang's departure.
The Wall Street Journal reported that Nvidia's board was scheduled to meet to discuss Huang's future, indicating preparations for a potential dismissal.
Wall Street analysts believe that if Huang were to leave, Nvidia's stock would suffer significant losses. Gene Munster, a partner at Deepwater Asset Management, told CNBC, "If a founder-led company lacks a clear successor or second-in-command, the stock could see a 20% adjustment."
Jay Goldberg, an analyst at Seaport Research Partners, noted, "If Huang were to resign suddenly, the stock could drop 20% in the short term." However, he cautioned that this initial shock could lead to even larger declines, as Huang has played a central role in decision-making since the company's inception, and his departure could exacerbate uncertainties surrounding succession and corporate value.
Wall Street's investment outlook and target prices for Nvidia are also being revised downward. According to Bloomberg, Bernstein recently downgraded its rating on Nvidia from 'Outperform' to 'Market Perform' and cut its price target from $400 to $200.
Previously, investment bank Baird had significantly lowered its price target for Nvidia from $500 to $200 and adjusted its rating to 'Neutral.' Morgan Stanley has also removed Nvidia from its list of top picks in the semiconductor sector.
* This article has been translated by AI.
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