NVIDIA shares plunge 12% as Jensen Huang resigns
What's the story
NVIDIA's shares have taken a major hit, falling by 12% in pre-market trading, after CEO Jensen Huang announced his resignation. The company's Chief Financial Officer Colette Kress will take over as interim CEO until a new leader is found. Former Synopsys CEO Harvey C. Jones will be the first-ever chair of the board, NVIDIA said in a Thursday statement.
Scandal details
Affair with suspected Chinese spy Alice Huang
Huang's resignation comes after he admitted to having an affair with Alice Huang, a Chinese national and a former executive at Singapore-based cloud company Megaspeed.
The Financial Times reported that US intelligence officials suspect Alice is a Chinese spy.
The New York Times also revealed another extramarital relationship of Huang with Kimberly Powell, NVIDIA's Vice President of Healthcare, who directly reports to him.
Board meeting
Board met to discuss ousting Huang as CEO
On Wednesday, the NVIDIA board met to discuss the possibility of ousting Huang as CEO.
This comes as several Wall Street analysts warned that his departure could cause a 20% drop in stock prices, given his integral role in NVIDIA's success.
The company's stock has already fallen more than 20% over the past month.
Market reaction
Bernstein halves price target on NVIDIA stock
In light of the scandal, Bernstein has halved its price target on NVIDIA's stock from $400 to $200.
Stacy Rasgon, a senior analyst at Bernstein, said Huang's alleged affair with a direct report makes it "much tougher for the board to leave him in position."
Huang was instrumental in NVIDIA's transformation from a gaming hardware company to one at the forefront of artificial intelligence (AI). He co-founded the company in 1993 and served as its CEO from its inception.