Graphics card manufacturer Nvidia has argued that investors cherry-picked corporate statements while ignoring others that supposedly showed transparency, as a lawsuit over its failing cryptocurrency mining chips intensifies.
Nvidia’s legal counsel also claimed that investors can’t rely on “speculative expectations of third-party analysts” as the basis of their suit, which should be dismissed, Law360 reports.
Spurned investors have alleged that Nvidia’s financial reports misled them into believing that high-demand for its gaming chips was entirely separate from the cryptocurrency boom.
Their suit claims the firm had told analysts that most of its cryptocurrency-related sales came from its Crypto SKU, a cryptocurrency-mining chip released in May 2017.
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Miners were instead still buying their gaming-specific chips to generate cryptocurrency before the Crypto SKU flopped. Nvidia’s gaming revenues reportedly continued to increase during this time.
Investors have claimed that, in August 2018, Nvidia revealed it had been reporting its cryptocurrency-related revenues together with its gaming totals. At the time, the cryptocurrency market was collapsing, and its gaming revenues were also dwindling.
Nvidia’s share price reportedly fell 29 percent in the fallout.
Back in August, Hard Fork reported that Nvidia’s chief financial officer had told analysts that its business had finally “normalized” after the Crypto SKU fiasco.
The firm’s chief exec even confirmed that cryptocurrency mining would add “no contributions” to Nvidia’s bottom line in the following months.
As for the attorney representing Nvidia’s spurned investors, he reportedly claimed on Friday that the firm’s execs had said crypto-related revenue was small, but that its effect was actually so large that it forced the company to miss its earnings that fiscal year.
To which effect, Law360 reports he ultimately argued Nvidia’s partial disclosures didn’t give investors or analysts the “full appreciation” of the company’s performance.
As for the judge, he reportedly thinks that the investors have alleged a solid theory. The suit is yet to be decided upon, so this should be considered a developing story.
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