CEO Jensen Huang appears to be done selling his Nvidia shares, at least for now.
Nvidia shares (NVDA 3.96%) The stock surged on Tuesday, climbing as much as 4.8%. As of 3:20 p.m. ET, the stock was still up 4%.
The semiconductor maker and artificial intelligence (AI) specialist’s shares rose on reports that its CEO had finished selling shares for now.
Over $700 million in sales
CEO Jensen Huang has been selling off a large amount of Nvidia stock in recent months, garnering investor attention. In total, he sold about 6 million shares, worth about $713 million, as part of a pre-arranged stock trading plan executed earlier this year.
The sale was made under a 10b5-1 plan, which allows insiders to sell shares in the future according to a prearranged schedule without running afoul of insider trading rules. In more than 40 transactions over the past three months, Hwang has sold 6 million shares, reaching the limit set by the prearranged plan, suggesting that, at least for now, the CEO is done selling off Nvidia shares.
Some investors tend to get nervous when insiders sell stock, especially large amounts. Rumors tend to spread that “they know something we don’t” or “the stock price has peaked.”
The reality is more mundane
But there are plenty of reasons to sell stock, especially when stock represents a large portion of an executive’s compensation. That’s certainly the case in Huang’s case, as 96% of his total compensation is in stock options tied to the overall performance of Nvidia’s stock price. As a result, Huang and other executives have to sell stock to reap the rewards of driving the stock price to new heights. So there’s nothing alarming or wrong about these sales.
Moreover, Huang remains the largest individual holder of Nvidia stock. According to the company’s most recent proxy statement, he owns more than 93 million shares, or 3.75% of the shares outstanding. This alone shows that Huang remains confident in Nvidia’s future prospects.
In short, there’s nothing to see here, so move on.
