Down nearly 48% from its early October peak, Nvidia Corp.’s recent slide has resulted in SoftBank Group considering offloading its stake in the graphics chipmaker. According to Bloomberg report, the deal is expected to fetch a potential $3 billion in profit for the Japanese investor.
Softbank presently holds an equity stake in Nvidia and has constructed a $6B collar trade, which would allow investors to accumulate stakes while protecting themselves against share price declines.
Over the years, Softbank has quietly amassed a $3 billion stake in Nvidia that by early 2017 made it the fourth-largest shareholder.
The value of SoftBank’s Nvidia’s stake peaked at $7 billion in September, but with the recent slide in share prices of Nvidia it’s expected that Softbank would get close to $6 billion if it were to exercise all of its options at their average strike price. The average price for the options, according to the market experts, is expected to hover in-between $230 to $240 a share.
Hit by waning demand in its gaming division and the persistent loss of demand from the collapse of cryptocurrency mining, Nvidia posted a below expectations fourth-quarter outlook in November. But the exit of its the fourth-largest shareholder, if it happens, could hurt Nvidia even more.