A class action lawsuit has been filed against the high-end GPU manufacturer Nvidia after it claimed a decline in business was relative to cryptocurrency mining.
Schall Law firm announced the lawsuit a week ago in a press release, and has called out to investors who purchased Nvidia stocks between “10 August 2017” and “15 November 2018” – tagged the “class period” – and lost over USD 100,000 as a result of the plunge in Nvidia’s stock price. The affected investors are encouraged to contact the firm before February 19, 2019.
According to the press release, Nvidia allegedly violated subsections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission.
The complaint quoted the company as claiming to be “masters at managing” their channel, and that they “understand the channel very well,” and that these claims were “false and misleading.”
However, amid a downturn of cryptocurrency market dynamics, Nvidia quoted in its financial results for Q3 2019 published on 15 November: “Our near-term results reflect excess channel inventory post the cryptocurrency boom, which will be corrected. Our market position and growth opportunities are stronger than ever.”
While the earnings were on the positive sides, a contrasting view of the company stock which plunged by about 17% may have been due to “crypto hangover”, a report by Yahoo Finance reads.
In August, Nvidia had already decided to quit the crypto mining business. CFO Colette Kress said that “We believe we’ve reached a normal period as we’re looking forward to essentially no cryptocurrency as we move forward.” It was clear back then that the company did take a hit from cryptocurrency mining fallout.
Nvidia was further quoted as saying that “any drop off in demand for its GPUs among cryptocurrency miners would not negatively impact the Company’s business,” boasting in the demands by the gaming market. Upon market revelation, the class action reads that investors “suffered damage,” and therefore the initial statements made by the company were “materially misleading” throughout the class period.
This year has seen a fair share of the decline in mining activities as companies such as GMO and Bitmain struggled through the terrains of the bear market. While many reports attributed the fall in Nvidia’s shares price to the decline in cryptocurrency mining relative to the decline in demand for high-end computer graphic cards, others were of the opinion that the stock price may have been impacted by other rivalry factors to include competition from other chip makers.
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