This week, an updated complaint was filed against NVIDIA in California by shareholders who consider themselves injured. The manufacturer of video cards is accused of trying to give out accelerator sales in the amount of about $ 1 billion for the cryptocurrency market as income from gaming equipment. This misled those investors who eschew speculative returns and are used to investing in a longer-term and stable business.
The lawsuit refers to the time three years ago, when the cryptocurrency market flourished: in particular, the demand for computing units of video cards for their use for mining sharply increased. “At the beginning of 2017 NVIDIA Faced an unusual problem: its flagship product disappeared from store shelves. Under ordinary conditions, this state of affairs could be rejoiced, – the claim says. – But the huge increase in sales is not associated with an increase in demand from players (traditional consumers of products NVIDIA), but rather with groups of online buyers who bought GPs in thousands and placed them in large data centers to solve complex mathematical problems in pursuit of digital tokens. ”
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The lawsuit further explains that NVIDIA decided to capitalize on the cryptocurrency boom by selling specialized equipment specifically designed for crypto miners. But she still discovered that many of her gaming graphics cards were bought for cryptocurrency mining. Knowing that the mining equipment market could collapse at any time, NVIDIA executives represented by Jensen Huang, Chief Executive Officer, Collette Kress CFO and Senior Vice President Jeff Fisher, according to the prosecution, decided to hide most of the sales of gaming graphics cards for the cryptocurrency market. The company allegedly presented the case as if the surge in sales of gaming video cards was caused almost exclusively by rush demand from players, and the inevitable collapse of the cryptocurrency market would not lead to a collapse in demand for GeForce video cards.
This allowed NVIDIA to create the appearance that it still receives most of its income from a more stable gaming market, despite the fact that the players themselves for several months complained about an abnormal price increase or the absence of video cards due to the activity of crypto miners.
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In November 2018, when the cryptocurrency mining market really collapsed, the price of NVIDIA shares fell by 20%, which dealt a significant blow to those who invested money, thinking that they were investing in a more stable business. Analysts mentioned in the lawsuit believe that NVIDIA deliberately underestimated its revenue from the cryptocurrency market by about $ 1.13 billion.
A number of shareholders are now using a class action lawsuit to get NVIDIA to compensate for their losses. According to them, managers deliberately distorted information about the company’s revenue sources, thereby violating US securities laws.
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