Yahoo Finance Nvidia Battles Shareholders in Lawsuit Over Crypto Miner Claims
Chip making giant Nvidia has been making its case for why a court should throw out a lawsuit alleging it misled investors over cryptocurrency mining demand for its graphics cards.
At a hearing over Nvidia’s motion to dismiss in Oakland, California, the firm said Friday that shareholders had “cherry-picked” some company statements in an attempt to show that it had not been transparent over how much of its sales were due to miners, while ignoring others.
The case comprises consolidated shareholder lawsuits first brought in December 2018, after its revenues dipped and stock slumped by 29 percent, Law360 reports.
Related: MARKETS DAILY: Casualties Ahead in the Cryptocurrency Mining Arms Race
The shareholders allege that Nvidia had not been clear that its gaming segment still included a good volume of miner revenue, even after it launched a dedicated mining card, the Crypto SKU. That was only acknowledged by Nvidia in August 2018 after gaming revenue slumped, they claim.
Nvidia’s legal counsel – Patrick E. Gibbs of law firm Cooley LLP – said the investors’ case was not valid as they had not provided any evidence that Nvidia had known about the facts as presented in the suit, and had also not shown any connection between the stock price losses and the allegations.
“There’s not a single piece of data,” said Gibbs.
The shareholders’ legal representative argued in response that Nvidia had indicated that crypto-based revenue was low, but was actually so substantial that the company missed its expected earnings when cryptocurrency prices dropped and miner demand fell.
Related: Canadian Government-Assisted Bitcoin Miner Files for Bankruptcy Owing Millions
During the hearing, District Judge Haywood S. Gilliam Jr. queried Nvidia over the fact that a Morgan Stanley analyst and others had appeared surprised when Nvidia stated in November 2018 that it expected revenues to decline over 7 percent.
Gibbs responded that some analysts went by the incorrect assumption that demand for gaming cards is “static.” He also argued that not all analysts responded with “same type of surprise” at the earnings forecast.
The judge is considering the arguments, according to Law360.
