Nvidia shares dropped 6.9 percent in premarket trading on Thursday. The company’s board met to determine the future of CEO Jensen Huang after revelations of two extramarital affairs.
The board convened on Wednesday to discuss removing Huang. He has led the company since co-founding it in 1993, according to CNBC.
Reports identified one affair with Kimberly Powell, the vice president of health care at Nvidia. She reports to the CEO. He was also involved with Alice Huang, an executive at cloud company Megaspeed. U.S. intelligence officials believe she is a spy for China.
Bernstein slashed its price target on the stock by half. It moved from $400 to $200. Stacy Rasgon is a senior analyst at Bernstein. She said the relationship with a direct report makes it “much tougher for the board to leave him in position.”
“Who is the right person now to make the decisions for the next 10 years? I don’t intuitively know who that person would be,” Rasgon said during an appearance on “Squawk Box Asia.”
Nvidia shares are down more than 20 percent over the last month. Richard Reyle is the chief investment officer at Questar Capital Partners. He described Nvidia as “uninvestable” due to the lack of a clear succession plan.
Shares of rivals AMD and Broadcom rose in premarket trading. Reyle said on CNBC’s “Access Middle East” that Nvidia lacks a designated successor. The company must decide between retaining Jensen or enduring a long period of intense scrutiny. This would likely involve numerous congressional inquiries and questioning.
Earlier coverage: Nvidia Shares Plunge as Board Reportedly Weighs Ousting CEO Jensen Huang