The California-based high-end Graphics processing unit (GPU) producer, Nvidia, has been recently charged with a class action lawsuit over the losses it reported in its statement when lower crypto prices diminished demand for its GPUs by the miners and for the influencing nature the cryptocurrency mining had on its business this year. The lawsuit was announced by the law firm, Schall law on December 24.
Schall Law is a US-based shareholder right litigation firm. As per the lawsuit filed by them, Nvidia violated the Securities Exchange Act of 1934. The law firm also requested all those investors who had invested in Nvidia’s shares between August 10, 2017, and November 15 of this year and those who lost over $100,000 after the share prices of Nvidia fell. The deadline given by the law firm to the investors to contact them is February 19 of next year.
As per the complaint document, Nvidia “made false and misleading statements to the market.” The document further states that “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.” 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.
With regards to the above, it further added that Nvidia’s statements “were false and materially misleading throughout the class period.” When the market “learned the truth,” it concluded, investors suffered losses.
The stock price of Nvidia has been on a downtrend this year due to the significant drop in the demand for the GPUs produced by Nvidia within the miner’s community. This drop in the demand ultimately resulted in a drop in its sales due to which the company missed its Q3 revenue expectation which was set at $3.24 billion. The actual revenue was clocked at $3.18 billion.
This brought in negativity for the performance of the company and resulted in selling pressure on the stock which made its price to drop. As per the Yahoo Finance data, Nvidia’s share was trading at $133.6 at the time of writing this article, after touching a high of $286
The yearlong bear market in the cryptocurrency’s ecosystem which saw the price of most of the top cryptocurrencies tumble up to 90% made it unprofitable for some miners to continue with the mining activity and this is the major reason for the drop in the demand for the cryptocurrency miner-related GPUs.