Stocks have been turbulent recently, and it appeared that Tuesday would bring some more bumps in the road for investors. Major market benchmarks were mixed, but the Nasdaq Composite (^IXIC 1.11%) was suffering the biggest decline in premarket trading. Futures on the Nasdaq were down close to half a percent at 8 a.m. ET.
One key stock pulling the Nasdaq down was Nvidia (NVDA 4.35%), which finally pulled the plug on a prospective acquisition deal that had been in the works for a long time. However, elsewhere in the market, another stock jumped sharply on news of a takeover bid. Below, you'll learn more about why Nvidia and Arm decided to call it quits, and then you'll see the name of this high-flying stock in the autonomous vehicle industry revealed.
Nvidia loses Arm
Shares of Nvidia were down more than 1% on Tuesday morning in premarket trading. The semiconductor giant has seen immense growth lately, but it wasn't able to get its prospective deal with Arm Limited completed.
Nvidia and Arm formally terminated their acquisition agreement late Monday. The companies cited regulatory challenges that were preventing them from coming up with a way to structure the deal to satisfy all parties. That agreement dates back to September 2020, which goes to show just how long and hard the companies have fought to try to get a deal done.
That said, the termination provisions of the agreement will still involve Nvidia and Arm having a relationship. Arm will retain the $1.25 billion that Nvidia prepaid under the agreement. In return, Nvidia will hold onto its 20-year license of Arm intellectual property.
Image source: Getty Images.
Nvidia founder and CEO Jensen Huang had praise for Arm, anticipating that the two companies will be partners well into the future. Huang sees Arm being most relevant in emerging areas like supercomputing, AI, cloud computing, and robotics, and in his words, he sees Arm's technology providing "the most important CPU architecture of the next decade."
Arm will now look at doing an initial public offering. That could take some time to complete, but Arm hopes at least to start preparations before the end of the end of its next fiscal year in March 2023.
Amazon makes an autonomous vehicle move
The big winner on the Nasdaq Tuesday morning was Velodyne Lidar (VLDR). The maker of key sensors for use in autonomous vehicles jumped 40% on news of its receiving a major investment from e-commerce giant Amazon (AMZN 1.49%).
Velodyne revealed the Amazon investment in a filing with the U.S. Securities and Exchange Commission late Monday. Under the terms of the deal, Velodyne issued Amazon a warrant under which it could acquire up to 39.6 million shares of Velodyne stock. The warrants will vest according to levels of commercial activity under existing business agreements as well as the provisions of anticipated new business agreements between Amazon and Velodyne. Amazon will pay $4.18 per share upon its exercise of any warrants that have vested.
The agreement also contemplates Amazon potentially naming a member to the Velodyne board of directors. That provision will take effect if Amazon eventually owns more than 12.3 million shares.
With Amazon running a massive fleet of delivery vehicles, autonomous driving technology could be a key to efficient operations. Investors are excited that the e-commerce giant is looking closely at Velodyne, especially after so many challenges have pushed the stock price sharply lower over the past year.
