Why Nvidia Stock Crashed Today
Key Points
Enigmatic CEO Jensen Huang has resigned from Nvidia, effective immediately.
The search for a new CEO has begun, with CFO Colette Kress serving as interim CEO.
The future for Nvidia is rife with uncertainty.
Shares of Nvidia (NASDAQ:NVDA) plunged today, falling as much as 14.3%. As of 10:24 a.m. ET, the stock was still down 6.2%.
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The catalyst that sent the artificial intelligence (AI) chipmaker lower was the announcement everyone has been waiting for.
Image source: Nvidia.
Huang is out
In a press release that dropped early this morning, Nvidia announced that co-founder, president, and CEO Jensen Huang had resigned from the company, effective immediately. The board of directors has begun the search for a permanent successor and has said it will consider both internal and external candidates.
While the search is ongoing, chief financial officer (CFO) Colette Kress will serve as interim CEO and executive vice president. Kress has been executive vice president and CFO since joining the company in September 2013, with nearly 25 years of accounting and finance experience at several high-profile tech companies, including Microsoft and Cisco.
At the same time, the board has appointed Harvey Jones as Nvidia's first-ever board chair.
Rumors have swirled over the past week that Huang had an affair with a woman now suspected of being a spy for China. Reports also suggest Huang had a relationship with a direct report within Nvidia.
In a statement released last weekend, Huang said, "I take full responsibility for what I did and the hurt I caused, and I accept the criticism that comes with it. I am committed to protecting Nvidia and supporting America's national security."
What's next for Nvidia?
The biggest question for shareholders is what's next for Nvidia, and unfortunately, there's a lot we don't know. Jensen Huang has had a singular impact on the success of the company he first conceived at a Denny's in 1993. Nvidia has a unique leadership structure that is unusually flat, with an estimated 60 direct reports, a remarkably high number for a company of its size. Huang was deeply involved in nearly all key decisions at the company, a process many credit for Nvidia's unprecedented success. As such, he will be a tough act to follow.
As a longtime Nvidia shareholder, I view this as a catastrophic loss for the company. I plan to hold my shares for now, but I don't view this as a buying opportunity.
Danny Vena, CPA has positions in Microsoft and Nvidia. The Motley Fool has positions in and recommends Cisco Systems, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.