- Nvidia has won a lawsuit filed in 2019 relating to its relationship with the cryptocurrency markets
- Company directors were accused of lying about the reliance on sales to the crypto market to the bottom line
- Nvidia’s share price collapsed 50% between October and December 2018
Graphics card maker Nvidia has won a court case against a group of investors who felt the company misled them over the depth of its cryptocurrency mining exposure. The case concerns the company’s relationship to the crypto market in the 2017/18 bull run and the bear market that followed, which saw the earnings and share price of the graphics card maker fluctuate wildly, but the company has been cleared of underrepresenting its crypto association to shareholders.
Nvidia Share Price Echoed Crypto Market
The case dates back to the bull run of 2017 when home mining was all the rage. Being the preeminent graphics card manufacturer, Nvidia’s most powerful cards were selling for huge markups on auction sites as miners looked to beef up their rigs to the max. This resulted in Nvidia ramping up production of new cards to meet demand, although this didn’t really get going until early 2018, at which time of course the bear market hit.
As early as April 2018 analysts were predicting that Nvidia would be badly hit by the crypto bear market, which it was, resulting in a stockpile of graphics cards and a black hole in its income. The share price collapsed 50% in two months at the tail end of 2018 as the financial results were made public, causing a group of investors to take the company to court on the supposition that they didn’t reveal the extent to which Nvidia’s share price was reliant on the crypto industry.
Judge Says Directors Did Not Know About Mining Reliance
When the case was first heard in 2019 the judge ruled that there wasn’t enough evidence to back up these claims but allowed the plaintiffs time to amend their case, which they did, resulting in a refiling that claimed Nvidia’s true reliance on the notably volatile crypto sector amounted to $1.126 billion.
Nvidia’s lawyers described the assumptions as “essentially arbitrary”, with the investors’ case further weakened when a witness later said that some of the statements attributed to him by the plaintiffs were “untrue and inaccurate”. It is perhaps unsurprising therefore that the judge ruled the company didn’t have a case to answer, stating that Nvidia’s directors didn’t know about the spike in crypto-related sales, meaning they cannot have lied about it.
Nvidia has since announced a new line of CMP chips that will be aimed exclusively at the crypto mining market, with cards containing them expected later this year.