Holding SoftBank sold a stake in Nvidia due to the fall in their prices, but still earned $ 3.3 billion

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Over the past months, shares of video card manufacturer Nvidia have lost almost 40% of their value. As a result, the management of the Japanese holding SoftBank decided to get rid of its stake in Nvidia. According to media reports, in 2017 the fund acquired a 4.9% stake for $ 4 billion. Despite the fall in their value, the return on investment was $ 3.3 billion.

What is happening with the shares of Nvidia lately

In recent years, the video card developer has shown rapid growth: from 2015 to the winter of 2018, the value of its shares has increased by more than 1,100%. In many ways, the rapid growth was ensured by the explosive development of the cryptocurrency sphere - the “iron” from Nvidia was actively used for their mining.

Growth in stocks was so rapid that some analysts claimed signs of an economic bubble. Similar dynamics of shares of some technology companies was observed at the moment, close to the crash of the dot-coms.

The slowdown in the development of the cryptocurrency market, the massive reduction in the cost of Bitcoin, and the attenuation of interest in mining have seriously affected Nvidia’s market position. Due to the decrease in profitability and decrease in interest in mining, there were many used video cards on the market, which led to a drop in sales - new video cards were produced in the warehouses. Also a negative impact on the dynamics of Nvidia shares had a slowdown in economic growth in China.

The head of Nvidia, Jen-Sun Huang (Jensen Huang), called it all "a hangover after the rapid growth of cryptocurrency," the consequences of which lasted longer than expected. As a result, Nvidia shares fell in price from $ 292 in September 2018 to $ 153 this week.

SoftBank Investments: Billions In Profit Despite Problems

SoftBank-controlled Vision Fund announced investments in Nvidia in May 2017. According to Bloomberg, the fund bought a 4.9% stake for $ 4 billion at that time.

As stated by the head of SoftBank Masayoshi Son, the use of trading strategies aimed at minimizing the risks of asset price fluctuations made it possible to sell the entire package at an average price of $ 218 per share. Purchase in 2017 occurred at a price of $ 105 per share. Thus, SoftBank earned $ 3.3 billion on investments in Nvidia.

Conclusion

According to Son, the fund sold Nvidia shares to concentrate on "investing in promising unicorns."

Nvidia is only one of the growing list of chip and computer hardware manufacturers who are suffering from the current economic situation. So in recent months, it became known about the decline in sales of the iPhone - Apple ’s potential losses are estimated at $ 9 billion. The company's problems hit the main suppliers of the company - for example, Intel , which supplies processors for the iPhone, faced with a fall in its shares.

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