Nvidia, cryptocurrency mining is still a problem (in court)

Sometimes they come back, one would say. In the two-year period 2017-2018 Nvidia and AMD were “hit” by a very strong demand for video cards with the explosion of the cryptocurrency mining. The two companies struggled to cover the demand for GPUs, but also saw a significant increase in sales and consequently in turnover.

With the end of mining via GPUs, Nvidia found herself with a large inventory that she struggled to dispose of for several months. The ghosts of the past, however, sometimes return, in the form of one lawsuit. Nvidia is indeed looking to drop a complaint according to which he would deceived investors and analysts about the turnover for that period.

According to the company, analysts and investors would have selected the news about its turnover with the “lantern”, misrepresenting the general picture, and this just before the stock price thump. Nvidia's shares plummeted significantly between September and December 2018 due to lower GPU sales adequate for mining. This obviously aroused discontent among investors, but the crux of the matter is as Nvidia reported the turnover data related to mining and those related to gaming.

Nvidia is basically accused of poor transparency: it would not have been clear that the gaming segment contained a good sales volume related to mining. According to investors, Nvidia recognized this mix of data only in August 2018 after the net drop in turnover. Nvidia's attorney, Patrick E. Gibbs of the Cooley LLP law firm, believes that what was claimed by investors is wrong, as they have not provided any evidence that the company knew the facts represented in the case, and showed no connection between the drop in share price and the accusations.

The legal representative of the shareholders replied that Nvidia instead declared that the turnover related to cryptocurrencies was contained, lying: it was in fact high enough to prevent it from reaching the expected turnover when the demand related to mining started to plummet and the price of cryptocurrencies collapsed.

During the hearing, District Judge Haywood S. Gilliam Jr. asked Nvidia why a Morgan Stanley analyst and others appeared surprised when the company stated in November 2018 that it expected a drop in turnover of more than 7% . Gibbs replied that some analysts mistakenly speculated that the demand for gaming video cards was “static”. He also argued that not all analysts responded by showing “the same kind of surprise” to earnings forecasts.

The judge is evaluating the arguments of the two sides and probably the case will continue for some time.