All may be fair in love and war, but the stock market keeps its own score, and on Tuesday it marked Nvidia down again. The chipmaker’s shares were trading at $167.87 on the Nasdaq at 19:28 UTC (14:28 ET) on 10 November, down 6.04% on the day, after a 4.27% fall on Monday. Together, the two sessions since Jensen Huang admitted to an affair in a letter to staff had wiped about $452 billion off Nvidia’s market value by that point. That is the biggest loss of company value tied to a chief executive’s personal conduct that TalkEsport has been able to find.
For scale, Hewlett-Packard lost about $9 billion of market value in a day when Mark Hurd resigned as its chief executive in August 2010, after an inquiry into his dealings with a contractor. Nvidia’s two-day loss is about 50 times that, and roughly 24 times the combined losses in all four of the other cases we compared. The figure multiplies the 24.1 billion shares in Nvidia’s latest quarterly filing by the fall from Friday’s close of $186.64. It is a TalkEsport calculation rather than an exchange figure, and it does not assume that every dollar of the fall is down to the scandal.
This is TalkEsport market analysis, not investment advice. Tuesday’s figures are intraday prices at 19:28 UTC (14:28 ET), before the US close, and earlier figures are Nasdaq closing prices.
How the Huang sell-off compares with HP, McDonald’s and Wynn
Corporate history has plenty of chief executives who left under a cloud, but few of those exits cost shareholders more than a few billion dollars. McDonald’s fell about 2.7% when it fired Steve Easterbrook in November 2019 over a consensual relationship with an employee, a drop worth about $5.2 billion on Bloomberg data reported at the time. Wynn Resorts shed about $3.5 billion over two sessions in January 2018 after allegations of sexual misconduct against Steve Wynn, which he denied, according to Fortune. CBS lost more than $1 billion in a day in July 2018, when news broke that The New Yorker was about to publish allegations against Les Moonves, who denied them.
Percentages tell a more modest story, and that matters for anyone reading the chart. Nvidia’s two-day fall of 10.1% is close to HP’s 8% drop in 2010, and well short of the 18% decline CNN reported for Wynn Resorts by early February 2018. The dollar figure is so large because Nvidia is so large, and on Friday it was still worth about $4.5 trillion. Every 1% move in its shares is now worth about $40 billion, more than HP, McDonald’s, Wynn and CBS lost combined. Huang’s own 811.5 million shares, the holding reported by 24/7 Wall St, had lost about $15.2 billion in value by Tuesday afternoon.
The cleaner test is what Nvidia did while the rest of its sector went up. On Monday, the Nasdaq Composite rose 2.7% and the PHLX Semiconductor Index jumped 6.9%, with Broadcom up 8.8% and AMD up 13.3%. Nvidia, the biggest chipmaker in that index by market value, fell 4.27% on the same day. On Tuesday, a hotter-than-expected inflation report pulled the market lower, and by 14:28 ET Nvidia’s 6.04% fall was about 6 times the Nasdaq’s 1.06% decline.
Had Nvidia simply tracked the Nasdaq Composite since Friday’s close, it would be worth about $527 billion more on Tuesday afternoon, on TalkEsport’s arithmetic. Measured against the chip index, the gap widens to about $708 billion, a rough measure of what could be called the Huang discount. The market’s fear gauge tells the same story, because the VIX stood at about 20 on Tuesday afternoon, down from 28.18 at the close on 5 November, the worst day of last week’s chip rout. Investors are calmer about the market as a whole, but they are demanding a far bigger discount for owning Nvidia.
What Nvidia’s 50-day and 200-day moving averages show now
Nvidia was trading 17.9% below its 200-day simple moving average on Tuesday afternoon, which TalkEsport puts at about $204.53 including that intraday price, and 23.0% below its 50-day average of $217.98. The shares dropped below the 200-day line on 2 November, climbed back above it for one session, then fell through it again on 4 November. Long-term investors often treat that average as the line between a correction and a broken trend. On that reading, the Huang scandal has landed on a stock whose chart was already damaged.
The 14-day relative strength index, a widely used momentum gauge, fell to about 24 on Tuesday afternoon, its lowest reading in more than 15 months of daily prices that TalkEsport analysed. Readings below 30 are usually described as oversold, and Goldman Sachs analyst James Schneider told clients that chip stocks were “now clearly in oversold territory”, Yahoo Finance reported. Oversold stocks can stay oversold for weeks, especially while the news keeps coming. The next obvious floor is $164.27, the intraday low of 30 March and the stock’s 52-week low, and Tuesday’s low of $166.24 came within about 1.2% of it.
The longer view, measured from the October peak, is harsher still. By Tuesday afternoon, Nvidia had fallen 29.8% from its record close of $239.24 on 6 October, a loss of about $1.7 trillion in market value in five weeks. It entered bear-market territory, more than 20% below that peak, during the chip rout of 5 November, when investors repriced the AI trade after the US midterm elections. If the shares simply held Tuesday afternoon’s price, the 50-day average would cross below the 200-day in about 14 sessions, around 1 December, forming the pattern chartists call a death cross.
Yields, the Fed and the key-person risk in Nvidia’s share price
Tuesday’s economic news made the scandal harder to shrug off. The Bureau of Labor Statistics said consumer prices rose 0.4% in October against forecasts of 0.3%, while core prices rose 0.3% against 0.2%. Fed Governor Christopher Waller said in London that he was leaning towards a quarter-point rate rise in December, and that a half-point move “should be considered” if core inflation stayed that strong. Traders put the chance of a December hike at about 84% on Tuesday morning, according to the CME FedWatch tool.
Bond yields climbed alongside those rising expectations of a hike. The 10-year Treasury yield rose from 4.86% to about 4.99% by Tuesday afternoon, according to Cboe data, after briefly trading above 5% for the first time since late October. Official US Treasury figures had put Monday’s 10-year rate at 4.88%. At a trailing price-to-earnings ratio of about 21, based on Google Finance data, Nvidia’s earnings yield is roughly 4.7%, a little less than a 10-year government bond now pays. Investors accept that kind of gap only when they are confident about future growth, and at Nvidia that confidence has long been tied to one man.
Analysts have begun to price that key-person risk openly. Bernstein noted that Huang sets Nvidia’s long-term strategy, has about 60 direct reports and has no obvious second-in-command, according to TradingKey. Dan Niles of Niles Investment Management disagreed, telling Yahoo Finance that Huang has “a very deep bench” of executives beneath him. Dan Ives of Yorkville Ives called the episode a “black eye moment” that would create “an overhang”, Fortune reported. Ives also estimated that the Street is pricing in only about a 15% chance of Huang leaving, while Yale’s Jeffrey Sonnenfeld put his odds of staying at 50-50, both according to 24/7 Wall St.
Wall Street’s price targets have barely moved by comparison. Citi’s Atif Malik cut his target to $285 from $315 on Tuesday and Wells Fargo trimmed its own to $300, both far above the share price, 24/7 Wall St reported. Malik wrote that the “key issues are likely potential governance implications” for investors, while Morningstar kept its $310 fair value but added “investigations and espionage” to its list of risks. Yahoo Finance’s Brian Sozzi noted that JPMorgan, Evercore ISI and Jefferies had not published anything on Nvidia since the scandal broke. Goldman’s Schneider argued that Nvidia trades at only about 12 times a “no growth” baseline for 2028 earnings.
On those numbers, the discount reflects doubts about leadership and governance rather than about demand for Nvidia’s chips. The news flow has not let up either. Shareholders filed a proposed class action on 9 November, according to Reuters, and President Donald Trump has said the FBI is looking into the matter, as we set out in our report on his comments. On Tuesday, The Information linked Alice Huang to a Chinese firm that it said moved $7.5 billion of Nvidia chips, which we covered in our Century Litong story.
No charges have been reported against anyone, China has rejected the espionage claims, and our Megaspeed explainer separates what is confirmed from what is only alleged. Nvidia’s board has said it has “no reason to believe” that national security or company secrets were compromised, and its independent review is continuing. Nvidia reports its third-quarter results on 17 November, and Huang has been asked to brief three House committee chairs behind closed doors the next day, as our congressional briefing story explains. The Federal Reserve announces its next rate decision on 9 December.
