Chipmaker Nvidia (NVDA) recently revealed that its top executives, including CEO Jensen Huang, CFO Colette Kress, and board member A. Brooke Seawell, have put new plans in place to sell some of their shares. According to the company’s latest 10-Q filing, Huang plans to sell 6 million shares, while Kress and Seawell plan to sell 500,000 and 1.1 million, respectively, through what’s known as a 10b5-1 trading plan. It is worth noting that Huang put his specific plan into place on March 20, and it will run through the end of the year on December 31.
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Interestingly, these 10b5-1 plans are a legal way for company insiders to sell stock without violating insider trading laws by letting executives schedule share sales in advance, often during periods when they don’t have access to non-public, material information. As a result, this protects them from accusations of selling shares based on insider knowledge and is a common tool used to bring transparency to insider transactions. Unlike surprise sales, which can spook investors, these plans help to reduce panic by indicating that the sales were pre-planned.
Still, knowing that the CEO and other leaders plan to sell millions of dollars’ worth of shares can affect investor psychology. Even if the sales are routine and legal, some investors may view insider selling as a lack of confidence in the company’s future, especially when multiple executives are involved. Nevertheless, given that Huang’s Nvidia holdings are worth $97 billion, investors should have little reason to worry since his scheduled sales are just a drop in the bucket of his overall stake.
What Is a Good Price for NVDA?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 34 Buys, four Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average NVDA price target of $170.42 per share implies 20.4% upside potential.
