‘It’s not as if they’re cashing out,’ analysts say, but execs are ‘very comfortable’ selling stock near $130
Nvidia CEO Jensen Huang remains a huge holder of his company’s shares but has been trimming his position in recent days.
Nvidia Corp. executives have been selling some of their shares in the wake of the stock’s frenzied rally, and the sales offer some nuanced takeaways for investors.
Chief Executive Jensen Huang and Chief Financial Officer Colette Kress have recently been making sales through trading plans they took up in March. While they’ve been able to financially benefit from the stock’s massive run, they also remain sizable holders of Nvidia shares.
“It’s not as if they’re cashing out,” analysts at VerityData said in a Monday report.
Still, investors can glean things from the transactions, namely around the levels at which they took place. It’s worth first noting how 10b5-1 trading plans work. The plans let executives and other corporate insiders sell stock based on preset conditions so they can avoid the appearance of trading off the day’s information. The plans are set to trigger based on various factors that can include timing and price levels, though it’s not always clear to investors exactly what spurs a sale.
There’s also a cooling-off period between when insiders create a trading plan and when they can start transacting through one, note analysts at VerityData. The Nvidia sales began once the executives’ 90-day waiting periods lapsed, and Nvidia shares had been on quite the run in that span.
“Shares of [Nvidia] rose 33% to 48% between the time the executives adopted their plans in March and [when] the first sales under those plans were transacted,” the VerityData analysts said in their report. “We expect insiders to employ minimum-sale-price thresholds and with the stock appreciating significantly between plan adoption and the expiration of the cooling-off period it’s not a surprise that minimums have been met.”
The VerityData analysts flagged that Huang has sold 120,000 Nvidia shares a day since June 13, “suggesting his trading plan will run 50 market days” if he is looking to sell the 6 million shares targeted by his (split-adjusted) trading plan. The company said in its last 10-Q that the trading plan allows for these sales through March 31, 2025.
The recent sales “are his first not involving expiring options since 2017,” the VerityData analysts said.
Nvidia declined to comment when asked if the company or the transacting executives had comment on the recent sales.
Though Huang is generating serious sums of money through his stock sales — one recent daily transaction was valued at around $15 million — the number of shares he is selling is still a drop in the bucket relative to his total holdings. He owns about 920 million shares, according to the VerityData analysts, accounting for about 3.75% of the Nvidia shares outstanding.
Kress also has considerable Nvidia holdings, though not to that degree. She recently sold 100,000 shares, but she still owns more than 5 million, according to her recent filing.
Her selling, like Huang’s, came at prices around $130, while Debora Shoquist, the company’s executive vice president of operations, sold about $47 million worth of stock at a price around $116 earlier in the month, according to VerityData.
Nvidia shares closed Monday at $118.11 after a three-session slide from record territory. The shares gained 5% in morning trading Tuesday.
“The aggressive nature of Shoquist’s and Kress’s sales (a Form 144 she filed suggests more sales in the near future) is a bit alarming and the takeaway is that insiders are sending a signal that they’re very comfortable generating liquidity here,” the VerityData analysts said.
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