Nvidia Faces New Class Action Lawsuit for False and Misleading Statements to the Market
Nothing lasts forever and one is liable for what they say, two adages that Nvidia are learning the hard way. They have been accused, by a law firm, of lying to the public and causing huge losses as a result.
Nvidia Corporation, the American technology company is based in Santa Clara, California. It designs graphics processing units [GPU] for the gaming and professional markets, as well as dabbles in chipsets for mobile and automobile sectors.
What Is The Case About?
The class action lawsuit has been brought about by Schall law over the losses the company has weathered since the Mid November collapse of cryptos. This, expectedly, slowed the market for GPUs. As per the claim, Nvidia has violated the Securities Exchange Act of 1934 as it “made false and misleading statements to the market.”
The document goes on to explain the primary basis of the complaint as
“NVIDIA touted its ability to monitor the cryptocurrency market and make rapid changes to its business as necessary. The Company claimed to be ‘masters at managing our channel, and we understand the channel very well.'”
This gave the false vision of a company that was working with an in-depth knowledge of the new technology, was expertly managed and had an agile setup. This claim feels hollow when one check on the performance of the company in this last quarter.
The complaint also outlines a second issue stating
“NVIDIA also claimed to the market that any drop off in demand for its GPUs amongst cryptocurrency miners would not negatively impact the Company’s business because of strong demand for GPUs from the gaming market.”
This gave a clear impression of the GPU market, while being linked to the crypto scene, was hardly dependent on it and would do well regardless of the happenings in that sector
What Are The Numbers?
Nvidia had been trading evenly, hitting a high of $289, in early October, however, since then it had been sliding down. This became a freefall in Mid November when the cryptocurrency crash hit and the company fell to $144. In fact, it was the worst reported performer in S&P 500. At the time of writing the prices are still in the mid $130 price range.
The main cause is said to be falling prices, this meant that mining of cryptos using GPUs was no longer profitable. At its peak, one could make a couple of thousand dollars with mining, even during calmer periods of mid 2017 one could still make upwards of $150 per coin. However, the downward trend has ensured that many miners have had to face extraordinary losses and thus exited the market.
It is an intriguing conundrum, to lay blame at the doorstep of a company for something that could have hardly been anticipated. Yet, do words have no responsibility, can someone print anything without it having the necessary gravitas? Nvidia has not responded to repeated requests for comment by multiple sources.