Nvidia Claims Investors’ Cherry-Picking Information, Not Misled about Crypto Mining Boom

  • Investors are relying on Morgan Staley analyst others who are clearly speculating – Nvidia
  • Nvidia misled about crypto mining demand & intentionally provided false information – investors

Nvidia has urged a California federal judge at a hearing on Friday to dismiss a case against it brought by investors who claim that the company misled them about cryptocurrency mining revenues.

The American technology company that designs graphics processing units (GPUs) says the plaintiff cherry-picked information and relied on a Morgan Stanley analyst and others who have been “speculating” Nvidia’s financials.

Crypto Woes Affecting Nvidia

The case was first brought in in Dec 2018 during the crypto winter when the leading cryptocurrency Bitcoin declined 84% and the crypto market lost a good chunk of its value. With this as one of the contributing factors in the company's disappointing Q3 results, the company's shares also recorded a significant drop in its price.

After the disappointing numbers in Q4 of the prior financial year and Q1 of this year however, for the three months ended 27 October, Nvidia reporting $3.014 in sales, up 17% on the prior quarter.

After struggling with weak demand in gaming and data segments since last year along with loss of demand from crypto, the company recorded upbeat earnings beating analysts' forecast but disappointed investors caused the share price to fall.

Nvidia Rips into Analysts

Nvidia’s core business is the gaming sector but the popularity of the crypto mining sector pushed the demand for its GPU units and the company towards the digital asset industry.

As such the company produced mining specific processors called the Crypto SKU in 2017. Nvidia then recorded the revenues from the hardware in the general business segment. However, the crypto miners still preferred other gaming chips.

Investors claim that the company led them to believe that the higher gaming revenues were separated from that of the crypto mining boom. And it wasn’t until August 2018, that the Nvidia admitted the gaming segment involved crypto-related revenue.

Last year, investors sued the company claiming the company misled them about crypto mining demand. But Nvidia claims investors are cherry-picking the corporate statement, ignoring the information provided by the company about its revenue streams.

Also, the company says analysts including the one from Morgan Stanley used a flawed model that suggested static demand for gaming chips. Investors claim Nvidia was trying to intentionally provide false information on how much it was bringing through crypto-related sales.

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