The Kobeissi Letter: Do not fire Jensen Huang, NVIDIA fell 35% on the 26th

The capital market commentary agency The Kobeissi Letter has voiced its opinion to the board of directors of Nvidia, urging them not to fire founder and CEO Jensen Huang. The agency stated that there is currently no clear candidate to replace Jensen Huang, and his departure would ultimately have a net negative impact on Nvidia, its shareholders, and the artificial intelligence industry. The agency cited a study on 187 cases of forced CEO departures among S&P 1500 index component companies, which indicated that replacing a high-performing CEO leads to negative long-term stock returns, and believes this case will be no different. The agency stated that Jensen Huang is a high-performing CEO, and the board should not make decisions in an emotionally charged environment.

The Kobeissi Letter suggested that the board take time to conduct a comprehensive investigation and consult with shareholders, focusing on listening to shareholder opinions, holding a special shareholder meeting, and conducting advisory votes on related decisions, stating that shareholders should have a voice. The agency noted that Nvidia's stock price has dropped 35% over 26 trading days, with nearly half of the decline related to recent scandals, and believes that the possibility of Jensen Huang being removed from the CEO position has already been factored into the price by about 80%. The agency also mentioned that Amazon retained Jeff Bezos as CEO after his extramarital affair became public in 2019, and the company's stock price rose 108% by 2021. The agency stated that personal misconduct should not be overlooked, but should be distinguished from corporate misconduct, and the consequences of replacing executives who are crucial to the company's success should be weighed.