The Fourth Largest Shareholder of NVIDIA Plans To Sell Its Stake Next Year

Dec 11, 2018
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SoftBank, a Japanese mega-conglomerate, quietly snapped up about $4 billion worth of NVIDIA (NASDAQ:NVDA)  shares back in early 2017 which placed it fourth in terms of NVIDIA’s largest public shareholders. The holding was eventually transferred to the world’s largest tech-investment fund, SoftBank’s own ‘Vision Fund’.

The Japanese company plans to sell its stake next year according to Bloomberg. Neither SoftBank or NVIDIA offered comment when questioned on the matter.

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The company has been getting hammered on the stock market since early October. On the first day of the quarter, October 1st, NVIDIA was at an all-time high of $292.75, good for a market cap slightly north of $180 billion.

While somewhat out of NVIDIA’s hands, a major large-cap tech sell-off began which brought it down to around the $200 mark, albeit with major support bands that kept that level intact for some weeks.

Then, came the inevitable: cryptocurrency related purchases, as it related to GPU-mining, fell off a cliff as miners’ demands for GeForce graphics cards disappeared. NVIDIA fell by more than 17 percent in the hours after its third-quarter results were posted. Things weren’t made any easier with the apparent lack of interest in its newer ‘Turing’ line of video cards in relation to its previous generation’s blockbuster success, the ‘Pascal’ generation.

Further complicating matters, the US-China trade route is a major revenue channel for technology and despite a temporary cease-fire between the two nations, the road looks to be rocky for the foreseeable future which affects the California-based GPU-maker.

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That is perhaps why SoftBank is looking to cash out. The same sources who came forward with the sale cited SoftBank could profit by as much as $3 billion, which will be secured by the collar trade that SoftBank has structured. The hedge sees SoftBank protecting its long-stock portfolio with some put options that allow the firm the right to sell NVIDIA at a certain price. Should NVIDIA continue to drop, these puts will dramatically increase in value, offsetting losses in the shares.

NVIDIA is currently down 48 percent from its October 1 peak and closed today $148.19, which puts it down slightly under 27 percent on the year, good for a market cap of $90 billion.

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