Nvidia Delisting (2)
Even short selling has its trends.
Much like seasonal trends in fashion, the financial markets quietly shared an unspoken consensus about which stocks were “this season’s shorts.”
A period of industrial transition from PCs to mobile. Overvalued tech stocks. A famous hedge fund publishing a short report. A company expected to post dismal earnings.
And, remarkably, Nvidia checked every single box.
On the earnings call, Ted Chang delivered the news in a heavy voice.
“The market penetration rate for the Tegra mobile processor has been lower than anticipated. Mobile segment revenue fell seventy-six percent year-over-year, and we will consider exiting the business.”
Neil Huang.
The well-known hedge fund manager released a short report.
Nvidia’s core business model faces a severe challenge. Meaningful profit generation appears unlikely for at least the next three to four years.
To the short sellers, it was an irresistibly juicy target.
Not attacking Nvidia would have been the stranger choice.
“This quarter’s trend is Nvidia!”
Strategy discussions among the shorts began in earnest.
Short selling had its trends, but it was also a game of reading the room.
“Haven’t we already milked Nvidia pretty hard over the past year?”
“True. It feels like it should stop falling soon. The stock’s dropped from sixteen dollars last year to twelve.”
“Still not in oversold territory, though. RSI is around thirty-five. If it drops below thirty, we can always get out then.”
Nvidia’s share price had already fallen far enough.
Should they land the finishing blow this time?
Or was it time to exit?
Then their eyes landed on the number.
— Current price: $12.
The moment they saw it, everyone thought the same thing.
If the ten-dollar level breaks, it could trigger a full-blown panic sell…
“Let’s hit it!”
“How big a position?”
“We’re thinking about two million shares.”
“Tiger’s in too. Four million shares! If Huang’s report is right, ten dollars is easily within reach.”
Soon they poured sell orders into Nvidia stock.
Without the slightest idea who was on the other side of those trades, quietly absorbing every share.
At that same moment, Lee Jaseung was finalizing the contract with Nvidia.
A consulting agreement on taking the company private.
With a side of thoroughly screwing over the short sellers.
Seo Minjae had flown in from Korea for this deal. He set his fountain pen down on the desk and spoke.
“Our side will provide the delisting strategy, corporate governance redesign, and countermeasures against the shorts. If you agree, please sign here.”
Ted Chang picked up the pen without hesitation. The soft scratch of the nib across paper filled the conference room.
A satisfied smile spread across Lee Jaseung’s face.
“You made the right call, Ted.”
“…….”
Looking at that smile, Ted felt as if he had just stuck his head into the jaws of a devil to escape a wolf…
But there was no turning back now.
“What do we do from here?”
“To take the company private, the proposal must pass at a shareholders’ meeting. We need sixty-seven percent of the voting rights. And the shares you currently hold are…”
“Four-point-eight percent. Including employee shares, about ten percent.”
A shareholding ratio that truly made one sigh.
That he had managed to retain control with such a meager stake until now was proof of just how powerful the founder’s leadership had been.
“So the rest is institutional investors and free-float shares on the market. We’ll start by sweeping up the institutions. I need to persuade them to hand their stakes over to me.”
Ted Chang looked uneasy at that.
“But institutional investors are long-term holders. I’m not sure they’ll give up their shares so easily.”
“It’s fine. The stock has been hammered by shorts all year, and the future still looks uncertain. Plenty of them will be desperate to dump their positions.”
“…….”
…Ouch.
Then Lee Jaseung added,
“Here’s the key point. We need to secure as many shares as possible, as quickly as possible. Offer the institutions a thirty-percent control premium. They’ll hand them over immediately.”
“A thirty-percent premium?”
Ted Chang couldn’t hide his shock.
And Seo Minjae, sitting beside him, was equally stunned.
They had no idea, but Lee Jaseung currently only had five trillion won to his name.
And he was offering a thirty-percent control premium on top of that?
Seo Minjae asked, worried,
“Can we really spend that much money?”
“It’s a necessary investment. When money needs to be spent, you spend it.”
Lee Jaseung ran the numbers rapidly in his head.
“Combining employee and institutional shares, we can lock in about forty percent. The rest we’ll have to buy from the free float on the open market.”
Seo Minjae nodded.
“The shorts have already driven the price down, so we should be able to buy cheap. I’ll distribute the purchases across multiple nominee accounts.”
“Good. How large is the short interest these days?”
“Twelve percent. Average daily volume is around ten-point-five million shares.”
“That’s on the high side even among tech companies.”
“Right. It was about the same when we shorted Facenote.”
Lee Jaseung had shorted plenty of stocks himself. He understood the psychology of short sellers better than anyone.
What would they be aiming for as they tried to exploit the fear of other market participants?
“They’ll try to break the ten-dollar support line. That’s when we start buying.”
“Maximum target?”
“Until the float is bone-dry.”
Seo Minjae’s head snapped up.
“Until it’s bone-dry? We only need sixty-seven percent of the voting rights. You’re saying keep buying even after that?”
“Yes. Going over is fine. As we keep buying, the shorts will catch on. ‘Someone’s absorbing all our supply.’ When that happens, we launch a tender offer outright.”
Ted Chang let out a small gasp.
Seo Minjae’s hands froze over the keyboard.
Short sellers eventually had to buy shares back to close their positions.
But if Lee Jaseung had already taken every free-floating share?
And if a tender offer was running at the same time?
“You’re going to engineer a short squeeze?”
“Exactly.”
A short squeeze.
To short sellers, the words were pure nightmare fuel.
When there weren’t enough shares left in the market to cover, shorts had no choice but to buy at any price.
The problem was that the shorts wouldn’t be the only ones buying Nvidia stock.
Because of the tender offer, Lee Jaseung himself would also have to purchase shares at elevated prices.
Seo Minjae swallowed hard.
Even five trillion won might not be enough for this…
“Then you’re at a disadvantage too. Once you’re competing with the shorts, you’ll have to keep paying higher and higher prices. Your capital won’t be enough. You’ll need to borrow.”
“I know. If the money runs short, we borrow from the banks.”
Good lord.
Seo Minjae pressed a hand to his forehead, feeling dizzy.
In the middle of a short squeeze, the short sellers and Lee Jaseung would be locked in a chicken game side by side.
One side for the delisting, the other to cover their positions.
Both would be frantically buying every share in sight.
Seo Minjae was genuinely starting to worry.
Burn through five trillion and take on debt on top of that? Is this really okay?
Ted Chang, meanwhile, was deeply moved.
The conviction to invest in our company even if it means going into debt!
And Lee Jaseung…
I’ll borrow first, then squeeze the missing money out of the short sellers.
…was already thinking about shaking them down.
Naturally, the short sellers never saw the delisting coming.
“Nvidia? They’ll do what they always do—buy back shares, raise the dividend, try to soothe the shareholders.”
The shorts dumped supply with their usual abandon.
The moment the stock finally broke below ten dollars, they cheered and threw even more shares onto the market.
“How much are we up?”
“Just our position is twelve million dollars in the green.”
“Looks like another easy payday.”
“Silicon Valley types never change. They talk a big game about innovative technology, but when the numbers are bad, the stock goes down. Simple as that.”
A few of them, however, had started to notice something off.
“Doesn’t this feel weird?”
“What does?”
“Why isn’t Nvidia buying back any shares?”
Whenever short pressure mounted, Nvidia had always activated a buyback program.
This time there was no such move at all.
The bigger problem was this:
“They’re not buying back stock, yet the price isn’t falling as much as it should. It’s holding up strangely well around the ten-dollar level.”
“Maybe some people are covering?”
“You think so?”
“The target price got hit, so some of them are probably just bailing. I’m staying in for more. We haven’t hit bottom yet.”
“Hmm. Still feels off, though…”
In the United States, short interest reports were published only once every two weeks.
The next report wouldn’t come out for another week, so no one had a precise picture of the current market flow.
A few who noticed that trading velocity had slowed quietly covered and got out.
But the majority stayed in.
They finally realized what was happening several days later—when Nvidia’s share price began to climb.
A phenomenon that should never have occurred for short sellers.
“This doesn’t make sense. We’re dumping a million shares a day and the stock is rising!”
“Someone’s absorbing our entire supply!”
And they were buying in quantities that matched the sell volume.
Otherwise the price simply could not have risen.
A chill ran down their spines.
“Any 13D filings on Nvidia ownership changes?”
“No, nothing disclosed. Any change of five percent or more would have to be filed, but…”
Someone was either buying under dispersed nominees, delaying disclosure as long as possible, or both.
Either way, the intent felt extremely sinister.
“What if someone has already scooped up every share we shorted?”
“Then there won’t be any stock left to buy when we try to cover…”
Goosebumps.
Everyone understood now.
The party was over. All that remained was the trap.
“Close every position. Right now!”
But it was already too late.
The Bloomberg terminal screen flashed. An urgent news alert popped up.
The giant screens in the trading rooms displayed Nvidia’s official statement.
The Board of Directors of Nvidia has unanimously approved a plan to delist the company. A tender offer for all free-floating shares will be conducted at a price of $15 per share.
“!!!!!!!!”
Holding a short position while a delisting and tender offer were announced?
It was the worst possible nightmare scenario.
Short sellers’ offices instantly turned into war zones.
“They’re delisting?!”
“Fifteen dollars? Yesterday’s close was ten-eighty! That’s a thirty-nine percent premium! How much are we going to lose?”
“Our current short position is approximately five million shares. If we cover at the tender price of fifteen dollars, we’re looking at a minimum loss of twenty-five million dollars—assuming we can even find the shares right now.”
“Find them now!”
Panicked traders grabbed their phones. Orders flooded the brokers to close positions immediately.
“Cover right now! If there’s no volume, buy at market!”
“Are you insane? Once the market opens it could gap above sixteen!”
The prediction proved correct.
At 9:30 a.m., the Nasdaq opened.
Nvidia stock was halted for trading the moment the session began. The price had surged too violently.
Ten minutes later, when trading resumed, the stock printed $16.30.
What followed was a death race.
As the shorts began covering, the share price rocketed higher.
Starting at $16.30, it blasted through $17 in barely thirty minutes.
Then Nvidia issued a second announcement.
In light of market reaction, the Board has decided to raise the tender offer price to $18 per share.
“These crazy bastards!”
“This isn’t a tender offer—it’s a deliberate short squeeze!”
The announcement unleashed a second tsunami.
The stock began climbing vertically once more.
$17.80, $18.25, $19.55…
Only three types of buyers remained in the market now.
First: short sellers desperately trying to cover their positions.
Second: opportunists looking to make one last profit before the delisting.
Third: Lee Jaseung.
But—
“The price has gone way too high.”
The shorts spat the words out through clenched teeth.
They could still cover in the open market. But at these levels they would be forced to close at absurd prices and take catastrophic losses.
They did not despair, however.
They still had one last card to play.
The institutions.
“Call every institution. Tell them we need to borrow stock.”
These days Lee Jaseung was staying at a hotel.
Having secured a comfortable stake in Nvidia, he was casually tossing a ball around.
Thump— Between the familiar sound of the bouncing ball, he spoke.
“Most short sellers are institutions. That means they have far more options available to them than retail investors. What would they normally do?”
Seo Minjae answered.
“They’d borrow stock from other institutions to cover—like juggling credit cards.”
Just as someone might use a KG card to pay off a Seoseong card balance, then roll that onto a Hanyeong card, they did the exact same thing with shares.
Borrow from Morgan to return BlackRock’s stock, then borrow from Fidelity to return Morgan’s.
“But that’s impossible now, isn’t it? We already approached the institutions first and took their inventory…”
Mid-sentence, Seo Minjae suddenly remembered that Lee Jaseung had bought far more Nvidia shares than originally planned.
They had secured a much larger stake than the initial target, and had even borrowed an additional five hundred billion won.
“Wait… you’re not…”
The puzzle pieces finally clicked into place.
“You’re going to be the one who lends them the stock?”
A smile curved Lee Jaseung’s lips.
“Yeah. I feel sorry for them.”
“…….”
Seo Minjae meant it from the bottom of his heart.
He actually felt sorry for the short sellers.
※ This work is a work of fiction. All characters, groups, place names, events, and other elements appearing herein are entirely fictional and bear no relation to any real persons or entities. Specialized knowledge described in the story has been restructured and adapted for narrative purposes and may differ from actual information.