Nvidia CEO exit points to a 13-point three-year stock lag

By Marcus Bennett

24/7 Wall St. reported that Nvidia shares closed Friday, Nov. 13, at $162.85, 13% below Nov. 6 and 32% below their Oct. 6 record close of $239.24, after Jensen Huang resigned as president, chief executive officer (CEO) and director.

Earlier, Nvidia closed Thursday at $166.19, down 4.3%, according to the report. The resignation took effect immediately Thursday morning. Nvidia named Colette Kress, its chief financial officer since 2013, as interim CEO. She retained the CFO position while the board searches inside and outside the company for a permanent successor.

Harvey C. Jones, a former Synopsys CEO, became the board’s first-ever chair. Kress called Huang’s tenure “the extraordinary foundation Jensen created over the last 33 years.” The report said Nov. 6 was the last close before Huang admitted an affair with a woman whom U.S. officials suspect of spying for China.

For Nvidia shareholders, the exit creates two immediate tests: interim leadership at the Nov. 17 fiscal third-quarter report and the search for a permanent successor. The report states that Kress will present as both CEO and CFO and that no permanent-CEO date has been announced.

What did 187 forced CEO exits show?

Paul Farah of Notre Dame University-Louaize and Hui Li of La Trobe University published the study in the International Journal of Financial Studies in 2021. They reviewed 735 CEO changes at S&P 1500 companies from 2003 through 2012 and classified 187 as forced. The category covered an ousted CEO, a resignation under pressure, and a young CEO who left quickly without another comparable job waiting.

The authors split those cases by the stock’s performance during the preceding three years. At 125 companies, the stock had trailed the market; at 53, it had beaten the market. Nvidia’s pre-exit record places it firmly in the second group.

• For the 125 lagging stocks, the five-day reaction to the forced exit gained 1.0%. The median company then beat the market by 18 percentage points over the next three years.
• For the 53 outperforming stocks, the five-day reaction fell 3.4%. The median company then trailed the market by 13 percentage points over the same period.

The source identifies four limits. The warning group contains only 53 companies from 2003 through 2012, and none matched Nvidia’s size. The study did not separate founders from hired managers. A median describes a tendency, not a forecast; half the companies performed better and half worse, with a wide spread.

Does Nvidia fit the outperformer group?

From Nov. 13, 2023 to the Nov. 11 close, Nvidia rose 258% while the S&P 500 rose 79%, according to 24/7 Wall St. Huang also meets the study’s forced-exit definition. The Wall Street Journal reported on Wednesday that the board was preparing to oust him, and he left Nvidia and its board the next morning without another job.

Nvidia named no permanent successor, and 49% of the study’s forced exits had none either. Farah and Li read that pattern as evidence that many such departures were unplanned. The reason was public through Huang’s Sunday statement and subsequent reports, and that mattered: when the study’s companies gave no clear explanation, their shares fell 3.2% over five days; when the reason was known, they gained 1.5%.

The founder does not resemble the study’s average executive: Huang was 63 and had run Nvidia for 33 years from its founding, against an average fired CEO age of 54 and six years in the job, according to 24/7 Wall St.

What does broader evidence say about timing?

PwC’s Strategy& examined CEO changes at the world’s 2,500 largest public companies from 2011 through 2013. It found that forced exits cost shareholders mostly before the announcement: median total shareholder return (TSR) amounted to a 13% loss in the year before the change and a 0.6% loss in the year after.

Nvidia matches the first half of that pattern, according to 24/7 Wall St. Its stock was down 13% over the preceding 12 months, while the S&P 500 was up 13%.

What happens to a concentrated shareholder?

The report constructed an illustrative case for a couple aged 68 and 65. The 68-year-old retired from an engineering job in 2021.

In January 2016, he bought 200 Nvidia shares at $32.37 in a taxable brokerage account because he had used the company’s chips at work. The position cost $6,474 before subsequent stock splits.

A four-for-one split in 2021 and a ten-for-one split in 2024 turned the original purchase into 8,000 shares. The couple held another $1.2 million in index funds in an individual retirement account (IRA).

Date	Nvidia price	Value of 8,000 shares
Oct. 6, record close	$239.24	$1,913,920
Nov. 6, before the admission	$186.64	$1,493,120
Nov. 11, before the resignation	$173.73	$1,389,840
Nov. 12, close	$166.19	$1,329,520
Nov. 13, close	$162.85	$1,302,800

The modeled stake was worth $1,302,800 on Nov. 13. That equaled 201 times its $6,474 cost and 52% of the couple’s assets outside their home. It stood $611,120 below the October peak and $190,320 below Nov. 6, while the S&P 500 rose 2.6% during that week.

The resignation day alone removed $60,320. Applying the study’s 3.4% five-day reaction to an outperformer would have cost $44,295 on the stake. Nvidia’s actual decline since the admission reached roughly four times that figure because the fall arrived in stages across a week of reports before the board acted, the report said.

The three-year calculation matters most. Applying the study’s 13-point lag to $1,302,800 left $169,364 less than an index fund by late 2029. The source’s industry-adjusted calculation used 15 points and a $195,420 shortfall. Had Nvidia resembled the underperforming group’s 18-point advantage, the gap would have run $234,504 in the other direction, but its record does not place it there.

How much does the tax bill change the math?

The study does not direct the investor to sell, according to the source. The report frames the base case as the market’s return minus an uncertain amount, with a wide range, for a stock that represents more than half of the couple’s assets. Taxes determine how much of that risk they can remove.

• Selling all 8,000 shares at $162.85 would realize a $1,296,326 gain, according to the source’s calculation.
• After adding $54,000 in Social Security and $48,000 in IRA withdrawals and applying the 2026 standard deduction, the first $40,500 of gain falls in the 0% capital-gains bracket. The next $514,800 faces 15%, and the remaining $741,026 faces 20%.
• A 3.8% net investment income tax (NIIT) applies to most of the gain in the source’s estimate. The federal bill would total about $268,754, leaving about $1,034,046 after tax.
• The sale would also set the couple’s Medicare premiums two years from now based on this year’s income, according to the report.

Selling 2,000 shares would realize $324,082 and cost $48,921, about 15% of the gain, leaving $276,779 to move into index funds. Selling 800 shares would realize $129,633 and cost $13,370. The source says that sale would trigger no NIIT because the couple’s income would remain below $250,000.

The report describes selling a tenth each year for several years as the path most planners draw for a position this large. The alternative is time: according to the source, shares held until death pass to heirs at that day’s market value, and the full gain goes untaxed.

That treatment is why the report says a 68-year-old investor with a $6,474 basis is usually advised to trim rather than sell.

What should investors watch now?

Nvidia reports fiscal third-quarter results Tuesday, Nov. 17, after the close, with Kress presenting as both CEO and CFO. The permanent CEO announcement is the other decisive variable, and no date accompanies the board’s internal and external search.

Farah and Li attributed the 13-point lag to boards that removed a winning CEO and then installed a successor unable to sustain the earlier run. Whether Nvidia’s board finds an exception to that pattern is the central test for any holder who stays. The modeled investor now has two concrete checkpoints: Nov. 17’s results and the permanent succession decision.