Nvidia’s Stock Plunges, Largest Investor Rumored to Exit

What happens if the golden goose starts laying regular eggs? That’s probably a good thing for someone who’d rather eat an egg than melt one down, but for the goose’s owner, going back to selling food instead of precious metal would suck.

This is pretty much what’s happening with Nvidia. The company’s share price continues to plummet from the highs reached during the cryptocurrency mining craze when eager miners purchased so many graphics cards the entire market changed. Now SoftBank, its largest backer, is reportedly mulling dumping its stock in the graphics giant.

You probably know what happened next: Nvidia increased supply of its GPUs right as miners lost interest because it wasn’t really feasible to turn a profit anymore. The company thought it would finally meet demand; it ended up exceeding it.

This was good for enthusiasts—they could finally buy graphics cards for reasonable prices instead of having to watch miners push them out of the market. But for Nvidia, the missed expectations led to oversupply and then to falling share prices.

The golden goose had gone back to laying edible eggs. Now, according to Bloomberg, that change has inspired SoftBank to sell its stake in Nvidia for a $3 billion profit. (Although the deal isn’t finalized and the investment group’s plans could change.)

SoftBank’s motivation is clear. Nvidia’s share price has fallen from its $289.36 peak to $147.83 at time of writing. Investment groups don’t hold on to stock like that when the peak’s conditions—in this case, the Ethereum boom—are unlikely to be replicated.

Nvidia has other problems, too. Some 20 percent of its revenue came from China, and with rising tensions between the U.S. and the country responsible for one-fifth of Nvidia’s revenues, investors are probably concerned by that as well.

Combine all that with the dubious reaction to RTX graphics cards and their up to $1,200 price tags and things get even murkier. Should the company exacerbate its crypto blunder by eating the cost of existing mid-range cards to offer new options?

We don’t know. But it seems clear that Nvidia’s share price is unlikely to stabilize any time soon. There are too many factors at play, from the crypto market to America’s relations with China, to predict how the company will fare heading into 2019.

At least we know what happens if the golden goose can’t live up to its promise: its owner sells it off to someone who doesn’t mind eating a few eggs while they wait to see if things go back to the way they were. It still sucks for the goose, though.

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  • bit_user
    1920539 said:
    The golden goose had gone back to laying edible eggs.

    Good analogy.

    For me, the bigger question is why they haven't been unwinding their position over this whole time. I wonder if the main thing that triggered the sell isn't actually news about other AI accelerators or self-driving that undermined those aspects of Nvidia's long-term value proposition.

    Also, which GPUs will China use? Some of Nvidia's sales is into their datacenters (you can see a number of Chinese supercomputers on Top500 that use Tesla P100's and V100's), but the bulk of that revenue has got to come from gaming products. And for that, we've yet to see a credible threat to big green.
  • SockPuppet
    We're still FAR from "reasonable prices" on new GPUs.
  • JamesSneed
    The RTX GPU's are priced out of most gamers budgets. Nvidia already had too much prior generation GPU's in stock so you would think you would discount heavily to move the stock but no Nvidia just keeps on trucking like nothing is wrong. AMD is going to have Navi out in not to many months which should be awesome for mid to low end in fact Nvidia should have nothing that compares to Navi in the powereby by the PCIE slot only arena. Then you have Intel asserting its coming to compete in 2020. Honestly I see no upside to Nvidia stock for a while.