Selling another 440,000 shares, what is Nvidia CEO Huang Renxun thinking?

Selling another 440,000 shares, what is Nvidia CEO Huang Renxun thinking?

Transaction documents disclosed by the U.S. Securities and Exchange Commission (SEC) show that on January 3, Nvidia President and CEO Huang Renxun exercised 440,000 options at an exercise price of $3.615 and sold them at an average price of $302.17 per share, valued at $3.615. About $133 million. It should be noted that Huang Renxun achieved profits through the “10b5-1” trading plan, not directly reducing his holdings.

Rule 10b5-1 is a rule established by the SEC in 2000 to allow insiders of listed companies to trade in the stocks they hold. Under certain conditions, insiders can also trade without being identified as insider trading. It allows company executives and directors to use a written, pre-arranged stock trading plan to meet commitments and financial planning needs, but to schedule stock transactions over an extended period of time to reduce the potential impact on the market. , and avoid doubts about whether the company’s executives and directors have material non-public information.

First, the company’s insiders must formulate a stock sale plan in advance according to the relevant provisions of the insider trading law; secondly, the formula and method of the price, quantity and sale date of the transaction need to be determined in advance; finally, the seller must give the broker the exclusive right to decide When to buy or sell stocks. During the process, neither the party selling the stock nor the brokerage is allowed to hold material non-public information.

This is the monetization method that most corporate executives in the United States take. In May 2021, Amazon founder Jeff Bezos sold 371,516 Amazon shares under the 10b5-1 deal. Since September 2021, Tesla founder Musk has also continued to sell Tesla shares in this way. According to Futu statistics, in the past six months or so, Huang Renxun has 11 records of corresponding exercise and share sales.

Selling another 440,000 shares, what is Nvidia CEO Huang Renxun thinking?

(Photo source Futu)

On November 22, 2021, affected by the positive news of the Metaverse, Nvidia hit an all-time high of $346 during the session, and then gradually fell. As of press time, Nvidia’s stock price was at $276.04. Therefore, the transaction price of Huang Renxun this time is just in the high point range, and the arbitrage opportunity has been successfully stepped on.

However, in Futu, Xueqiu, Tiger and other investment communities, there are also investors who worry that Huang Renxun’s profit-making behavior will make Nvidia’s stock price fall “worse”, showing that the management had previously estimated that Nvidia’s stock price peaked in a certain range, and then May continue to kill valuations. On the evening of January 4, Nvidia fell 5.76%. As of press time, Nvidia fell again before the market.

However, in the long run, Nvidia’s position in semiconductors, data centers and other fields is still solid. In addition, Nvidia is continuing to promote the application of its chips in the autonomous driving industry, where Intel and Qualcomm are both competing fiercely. Micron Technology, Marvell Technology and Nvidia are the most favored companies in the semiconductor industry by a Bank of America survey in December. UBS and Citi both list Nvidia as the preferred stock in the semiconductor industry in 2022, and are optimistic about its target price to around $350.

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