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Nvidia CEO Jen-Hsun Huang
image : Nvidia
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Softbank is reportedly planning to sell it stake in graphics cards and chip maker Nvidia, one it picked up quietly for $4 billion early last year and will stand to profit handsomely even as the company’s shares slide in the public markets.
Bloomberg
reports Softbank’s profit could be about $3 billion from a stake offload having built up a collar trade (an options strategy built by holding shares of the underlying stock while also buying protective puts and selling call options against that holding) of about $6 billion.
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Nvidia’s Jen-Hsun Huang and Tesla’s Elon Musk at its GTC 2015 conference
image : Nvidia
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Amid a trade clash between the U.S. and China and also lesser demand and growth predictions for chipmakers, Nvidia has fallen 48% on the Nasdaq since its peak on the 1st of October, trading at $148 per share (as of writing) with a market capitalization of $90.4 billion.
An opportunity for Softbank to offload its stake is said to be structured via a series of tranches that will begin expiring early next year, The average price for these sale options is between $230 – $240 according to Bloomberg’s report which also notes that Softbank may turn away from the decision to sell the stake it later transferred to the Vision Fund if Nvidia’s shares pick up.