INTERNATIONAL – SoftBank Group is planning to offload its stake in Nvidia early next year as shares in the graphics chipmaker continue to slide, according to people familiar with the matter.
The Japanese investor could make about $3 billion in profit from the trade, said the people, who asked to not be identified because the matter isn’t public. No final decision has been made and SoftBank may opt to keep its stake or sell only part of it, the people said.
Representatives for SoftBank and Nvidia declined to comment.
While SoftBank still holds an equity stake in Nvidia, it has constructed a so-called collar trade of about $6 billion, the people said, which allows investors to amass stakes while protecting themselves against a decline in stock prices. SoftBank has structured equity trade deals with investment banks to hedge against a drop in Nvidia’s share price, the people said.
For much of this year Nvidia’s stock had been on a tear, benefiting from a range of factors from artificial intelligence to cryptocurrency mining. However Nvidia’s shares have fallen 48 percent since their peak on Oct. 1 as the trade spat between the U.S. and China combined with weaker demand and growth prospects for chipmakers.