📉 Jensen Huang resigns as Nvidia CEO; shares fall 10% premarket

Nvidia's board announced Thursday morning, Nov 12, that Jensen Huang has resigned as president, chief executive and board member, effective immediately, according to the company statement quoted by the Daily Star and CNN. CFO Colette Kress is interim CEO. The reports read give no time in ET for the announcement, but CNN and BBC News both place it before the 9:30 AM ET US market open.

The exit terms

Nvidia filed an 8-K with the SEC dated Nov 12, per the EDGAR listing. The reports read do not say what is in it. None of them describes severance, equity treatment or a consulting deal, so those terms are unknown here. MrMoney does not price what it cannot read.

One number is on record from before the exit. BBC News, citing a June SEC filing, said Huang owned more than 870 million Nvidia shares, just over 3.5% of the company. The reports read do not say whether that holding changed.

The stock reaction

CNN reports Nvidia fell 10% before the bell, with declines accelerating after the announcement. Nasdaq futures were down 1.4% and S&P 500 futures 0.7%. BBC News also reports pre-market shares down 10%.

The Wednesday session set the table. The NY Post reports shares were down 8% in after-hours trading after the Times report. The Motley Fool puts that drop at 7%.

Estimates of the damage differ by outlet. CNN says Nvidia has shed more than $300 billion in market value this week. The NY Post says around $450 billion was wiped from its value. CNN also cites an estimate from analyst Dan Ives that Nvidia could lose $1 trillion of market value if the CEO is pushed out. That is a forecast, not a ledger entry.

Who says what

The Wall Street Journal reported Wednesday that the board was preparing to remove Huang, according to the NY Post, which said the Journal cited people familiar with the matter. The board met late Wednesday, CNN reports.

The trigger was a New York Times report, which BBC News says drew on five people who had worked at Nvidia and spoke anonymously. The Times reported that Huang had a relationship with a vice president who reports directly to him. It also reported that a bystander filmed the pair at a San Jose hotel in March, and that Huang's security team offered the bystander a nondisclosure agreement. The Times said it had not viewed the recording, per the NY Post. Nvidia's code of conduct warns employees against conflicts of interest involving personal relationships, the NY Post notes.

The response

On Wednesday the Times called Huang about the claim. He replied, "I don't think you should be talking to me directly," and hung up, the NY Post reports. The executive did not immediately answer the NY Post's request for comment. No public response from Huang to the resignation itself was found in the reports read.

The board's statement was warm. BBC News quotes it:

"Jensen’s contributions to Nvidia are profound"

Nvidia board statement, as quoted by BBC News

Huang's earlier words are also on record. In a Sunday email to staff he wrote, "I was unfaithful to my wife," and "There is no excuse for what I did," the NY Post reports. CNN notes that email did not name the other party. CNN recalls that a Nvidia spokesman had told the Times about two weeks earlier that Huang's interactions with a Megaspeed executive were "not unusual or unexpected." CNN quotes former SEC chair Gary Gensler as saying the statement "appears to be directly contradicted" by what followed.

What happens next

CNN reports the board will consider internal and external candidates for a permanent CEO. Kress stays interim until then. The NY Post says the shake-up comes less than a week before Nvidia's third-quarter earnings report; the reports read give no date. Three House committee chairs had asked Huang to attend a closed-door briefing on Nov. 18, per the NY Post. Whether that request still stands after his resignation is not stated in the reports read. The board's independent investigation, run by the law firm Wachtell, Lipton, Rosen & Katz per CNN, has no reported end date.

Backstory

This follows our earlier coverage: "Nvidia board opens Jensen Huang probe; shares seen 4% lower", "Nvidia hires Cuomo investigator Joon Kim to probe Jensen Huang" and "Congress presses Nvidia's Jensen Huang over Megaspeed claims". Also on file: "Nvidia, Jensen Huang face shareholder suit over Megaspeed" and "Jensen Huang faces subpoena threat from House China committee".

CNN reports that a shareholder lawsuit filed Monday in a California court alleges Nvidia and Huang deceived investors in their responses to media reports about the affair. The reports read do not carry a response to that suit.

As of Nov 12, 9:17 AM ET, the confirmed part is the board's announcement that Huang resigned effective immediately, that Kress is interim CEO and that Jones is chair. Nvidia's 8-K is on file with the SEC. The pending part is long: the exit terms, the 10% premarket drop (US markets open at 9:30 AM ET, per BBC News), the investigation, the shareholder suit, and a permanent CEO. The second relationship claim rests on the Times' anonymous sourcing, and Huang has not addressed it publicly in the reports read.