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Nvidia hit with class action lawsuits following the cryptocurrency crash

By William Gayde · 19 replies
Dec 31, 2018
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  1. As anyone who was trying to build a computer during the cryptocurrency mining boom knows, GPU prices often follow trends in the crypto markets. When Bitcoin prices were up, GPU prices skyrocketed and cards were difficult to come by. This left some investors worrying about what would happen once prices and demand fell back down.

    During the boom, Nvidia put out a statement saying that they were "masters at managing" the market and that any drop in demand from crypto would not negatively impact their business. However, when the crypto demand went away, it did affect their business and investors aren't happy. Nvidia was left with massive oversupply and the market was flooded with used cards. Nvidia's stock is now down more than 50% and it is still plummeting.

    The Schall Law Firm is representing numerous investors in a class action suit. It alleges that Nvidia made false claims to investors about their ability to maintain demand and withstand any drops in the crypto market.

    The suit is really only meant for serious investors though since they are looking for those who have lost more than $100,000 since the crash. They claim:

    According to the Complaint, the Company made false and misleading statements to the market. 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. Based on these facts, the Company’s public statements were false and materially misleading throughout the class period. When the market learned the truth about NVIDIA, investors suffered damages.

    It will be difficult to prove exactly how much of an effect the crypto market had on all of this since there are numerous other factors than influence prices. For example, the Trump Administration's trade war with China, companies like Google, Apple, and Amazon developing their own chips in-house, and upcoming launches from Intel and AMD.

    While AMD has certainly been hit by the slump as well, they have also seen large growth in their CPU market which will help offset it. Nvidia, however, is primarily a graphics card company.

    Nvidia is facing at least three other class action lawsuits on similar grounds, so 2019 could be very rough for them.

    Permalink to story.

  2. cliffordcooley

    cliffordcooley TS Guardian Fighter Posts: 11,403   +5,022

    That is what they get for investing. It is not nVidia's fault they decided to invest.
  3. Reachable

    Reachable TS Evangelist Posts: 369   +183

    The company is named Nvidia. You gotta expect invidious statements like that.
  4. Uncle Al

    Uncle Al TS Evangelist Posts: 5,400   +3,793

    The courts need to look at was was promised and how investors were lured into the investment. True that they bear responsibility for taking the risk but if Nvidia capitalized on the sale with less than honest claims they should be held liable .... but their liability should be limited to a complete refund of the product cost with no opportunity for those harmed to make a windfall at Nvidia's expense.
    Right side bob likes this.
  5. Reachable

    Reachable TS Evangelist Posts: 369   +183

    It sounds like their statement was an attempt, not to lure investment, but to calm existing investors. It could have been an honest miscalculation based on unforeseen events.

    I, of course, have no way of knowing what transpired.
  6. yRaz

    yRaz Nigerian Prince Posts: 2,895   +2,220

    I think the comments section needs to realize people bought stock because of how Nvidia lied about how they were in control of sales.

    Investing has risks, this wasn't drop caused by an investment risk. Nvidia created artificial demand for stock by lying about demand for their product.

    I know ever since the last market crash everyone loves to hate investors(it wasn't investors who caused the crash, it was the bankers). The thing is, no one deserves to be lied to and stolen from.
  7. cliffordcooley

    cliffordcooley TS Guardian Fighter Posts: 11,403   +5,022

    Yet that is exactly what the investor is doing when they profit.
  8. poohbear

    poohbear TS Maniac Posts: 299   +211

    It was the 1st thing I thought in their last quarterly report. I was like but hey the previous quarter u said crypto was hardly a dent ur profits????
  9. Jules Mark

    Jules Mark TS Enthusiast Posts: 54   +17

    It's raining NVDA lawsuits !! Nvidia still has a P/E ratio of 18.47 while industry's average P/E is 12.19 So there's still some room to fall further.

    AMD's announcement of new gen product at CES 2019 is coming very very soon. I expect it will be new product of 7nm flavor. And not the 12nm refresh WccFtech, VideoCardZ claimed. And one of then could be a mid range NAVI part, likely to take on GTX 1070 WHILE price at the same level of an GTX 1060. How I know this? AdoredTV just reconfirm the info's he got from his insider contacts.

    It will put tremendous pressure on Nvidia's unsold GTX 1060's, maybe even their upcoming RTX 2060 and GTX 1160's.

    If I had a margins account I would short NVDA right this instant!
    Last edited: Dec 31, 2018
    Dimitrios likes this.
  10. Sausagemeat

    Sausagemeat TS Maniac Posts: 409   +205

    Lol, sensationalist news at its best. Class action suits always spring up when a companies share price falls usually as investors lose money, get desperate and look to the law to try and get it back.

    What’s going on right now is the markets have declined across the board (look it up). Investors would have lost money almost regardless on who they invested in. And when this happens investors get desperate and file class action against anyone, using whatever statements that particular company has made.

    This is usually why listed companies are very hot on who within them goes to the press. And why Elon musk is a complete headache to his own company.

    As for Nvidia, I suspect these suits to be thrown straight out. Much to the disdain of the members of the tech community here who who seem to hate them for pricing their components higher than they would like them to.
    EEatGDL likes this.
  11. captaincranky

    captaincranky TechSpot Addict Posts: 14,976   +4,010

    The next time I don't like the news in the paper I just bought, I'm going to sue the guy at the newsstand who sold it to me

    Sure I'm a greedy, malcontented zealot, and a dyed in the toilet paper a**hole, but what the hell, America is a very litigious society, and I don't want to seem out of step with my fellow citizens, by not filing a frivolous, merit less lawsuit from time to time. .
    cliffordcooley likes this.
  12. EEatGDL

    EEatGDL TS Evangelist Posts: 693   +376

    OK, let's take a look at the last 6 months of "FAANG" stock performance (the following percentages are relative to their all time high and also within the last 6 months) and assess the impact of crypto-mining:
    • Facebook: down 40%. Facebook surely did a bad bet on crypto-mining.
    • Amazon: down 27%. Surely AWS were doing some mining.
    • Apple: down 32.5%. I don't know... crypto-mining for sure.
    • Netflix: down 37%. They probably use Ethereum for streaming.
    • Google (Alphabet): down 20%. They weren't that stupid, they diversified, so mining didn't impact that much.
    And the culprits of all of this:
    • AMD: down 46%.
    • NVIDIA: down 55%.
    Now, let's remind you something that even the writter of the article forgot or oversaw: stock performance and companies' real financial performance are not always correlated. There is something called "market sentiment" that means the investors make the market based on hype, panic, fear, doubt and buy and sell volumes accordingly.
    NVIDIA's revenue is not crashing nor there is a "Rome burning down" situation, same with the others. I'm pretty sure Amazon is selling more by the day, yet you see its stock performance declining too.

    Investors crying for market reaction and not taking the necessary precautions (read "setting sale stop-losses to minimize losses or protect profit") is absolutely childish, it's always easier to blame someone else for your own mistakes. Guess what: the companies aren't in control of their own stock price; they have an authorized stock buy-back budget but using it all at once for raising or maintaining the price is market manipulation.
    We have been in a bull market for the last decade and you can't simply expect to keep going up simply because you want to. They go up and they go down, that's healthy. There were warning signs since four or five months ago that we had hit the top and are going down, a recession is coming or happening, yet it's made official only months after you've been in a recession period. So to those childish investors: man up and realize the trend has changed, trade or invest accordingly.
    mosu and QuantumPhysics like this.
  13. QuantumPhysics

    QuantumPhysics TS Evangelist Posts: 1,254   +910

    All opinions expressed by NVIDIA's CEO are solely NVIDIA's CEO's opinions and do not reflect the opinions of anybody else - or their parent company or affiliates, and may have been previously disseminated by NVIDIA on television, radio, internet or another medium. You should not treat any opinion expressed by NVIDIA as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. NVIDIA opinions are based upon information he considers reliable, but neither NVIDIA nor its affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. NVIDIA, its affiliates and/or subsidiaries are not under any obligation to update or correct any information provided on this website. NVIDIA's statements and opinions are subject to change without notice. No part of NVIDIA's CEO's compensation from NVIDIA is related to the specific opinions he expresses.

    Past performance is not indicative of future results. Neither NVIDIA's CEO nor NVIDIA guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed on this website or on the show. Strategies or investments discussed may fluctuate in price or value. Investors may get back less than invested. Investments or strategies mentioned on this website or on the show may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. You must make an independent decision regarding investments or strategies mentioned on this website or on the show. Before acting on information on this website or on the show, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.
    Danny101, cliffordcooley and EEatGDL like this.
  14. EEatGDL

    EEatGDL TS Evangelist Posts: 693   +376

    That's pretty much a standard disclaimer, I see the same in other companies' documents meant for inverstors and the "past performance is not indicative of future results" is the baseline warning for all investments. I really don't see a ground for the lawsuits, be it NVIDIA or any other company publicly traded.
    Danny101 and cliffordcooley like this.
  15. Darth Shiv

    Darth Shiv TS Evangelist Posts: 1,963   +577

    You can't have it both ways. The stock price soared on the back of crypto. If NVIDIA was in control of that, they'd just keep firing sales upwards.

    But it's plain as day they are NOT magicians with control over the sun, winds and seas.

    Rookie investors having a cry they lost money on pure market economics? Where's my violin?
    cliffordcooley likes this.
  16. Danny101

    Danny101 TS Guru Posts: 772   +294

    Profit projections are not a guarantee. Any investor should know that.
    Darth Shiv likes this.
  17. wiyosaya

    wiyosaya TS Evangelist Posts: 4,000   +2,295

    I think you hit the nail on the head and drove it home with this comment.

    If nVidia really did claim that they had the crypto market under control, it is yet another example of the corporate hubris that will come back to bite them in the a$$.
  18. QuantumPhysics

    QuantumPhysics TS Evangelist Posts: 1,254   +910

    I keep thinking to myself all the Millennials running around saying "Bitcoin" or "Ripple" were gonna be $1,000,000 by now.

    "I bought some Tron at just ___ cents"



    And next come Weed Stocks.
  19. Darth Shiv

    Darth Shiv TS Evangelist Posts: 1,963   +577

    Honestly how can they lie about demand for their products? Wouldn't Newegg etc be able to show the trends at retail sales level? There is going to be a TON of data for giving real trends.
  20. QuantumPhysics

    QuantumPhysics TS Evangelist Posts: 1,254   +910

    Demand for Nvidia's cards is high. The issue is that people can't afford em. Same thing is going on over at Apple.
    cliffordcooley likes this.

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