First published 11-12 23:37
Update time 11-13 05:50
Huang Renxun resigned as CEO of Huida. (AP)
[Financial Channel/Comprehensive Report] Huang Renxun, the founder of AI chip giant Huida, resigned from his position as CEO on the 12th after being involved in extramarital affairs and national security suspicions, which shocked the global financial market. Huida's stock price plummeted after opening on Thursday, with the cumulative decline in the past month approaching 25%. At least six Wall Street analysts quickly downgraded the stock, and some analysts described it as "a dark day for Huida."
CNBC reported that Huida announced on the 12th that Huang Renxun would step down as CEO, with Chief Financial Officer Colette Kress acting as interim CEO until the official successor is elected. However, Huang Renxun has been at the helm of Huida for more than 30 years and has long dominated the company's technology strategy, product direction and customer relations. His sudden departure has made the market worried about whether Huida can maintain its original competitive advantage.
Wall Street analysts quickly adjusted their investment evaluations. Melius Research analyst Ben Reitzes, who has long been optimistic about Huida, lowered his rating from "buy" to "hold" and slashed the target price from $315 to $185. He admitted that the developments in the past few weeks have caught him off guard, especially the recent controversies that have greatly increased investment risks, so he decided to temporarily withdraw from the sidelines.
Evercore analyst Mark Lipacis also lowered his rating from "outperform" to "in line" with the target price plummeting from $465 to $186, a drop of 60%. He pointed out that the relevant investigation may take a long time, and Huida lacks a clear succession plan, and the market may continue to downwardly revise the company's price-to-earnings ratio.
Bernstein analyst Stacy Rasgon cut the target price from $400 to $200. He believes that the fundamentals of Huida's core business are still solid and the huge demand for AI has not disappeared immediately. However, whether there will be more accusations in the future and the uncertainty of the official successor may suppress investor confidence.
Well-known technology analyst Dan Ives even bluntly said that this is "a dark day for Huida." He estimated that when Huang Renxun continues to serve as CEO, Huida will be worth about US$300 per share; if Huang Renxun is lost, the valuation will drop to US$225, a difference of US$75 between the two. However, he still believes that Huida can survive the turmoil and continue to play an important role in the AI revolution.
KeyBanc analyst John Vinh pointed out that Huang Renxun's departure will significantly increase Huida's strategic, organizational and execution risks. Even if the core business is still strong in the short term, it will not be easy to find a successor with the same leadership capabilities and strategic vision.
Former Nasdaq Chairman and CEO Robert Greifeld criticized Huida's board of directors for poor performance in succession planning. However, he also believes that chip research and development and customer contracts are long-term, and the new CEO still has time to familiarize himself with the business, so that existing product development plans will not be immediately disrupted.
Bill Blain, founder of Wind Shift Capital, said bluntly: "Huang Renxun is out!" He pointed out in the morning investment report that Huida's over-reliance on Huang Renxun has now become a major market risk. This company that dominates the AI industry lacks a clear succession plan, and Huang Renxun has long been regarded by the outside world as the most representative and most recognized figure in the AI industry. He warned that the market's confidence in the AI industry has continued to waver in the past few months, and Huang Renxun's departure may further cause market instability or even trigger another collapse.
UBS Global Wealth Management Chief Investment Officer Mark Haefele and his team said on Thursday that Huida’s personnel turmoil highlighted the risks of over-concentration in technology stock investments. He pointed out that he would not express his views on individual companies, but as the AI investment craze gradually matures, this incident once again highlights the importance of diversified investment and prudent stock selection. UBS is still optimistic about the long-term development potential of the AI industry, believing that computing demand remains strong and corporate profits are resilient. However, as market expectations remain high and the future performance of each company may be significantly different, an investment portfolio with over-concentrated holdings may bear a greater impact due to setbacks of individual companies.
