Due to claims made during the cryptocurrency crash in 2018, Nvidia is being hit with several class action lawsuits on behalf of its investors.
Most cryptocurrency enthusiasts are glad to put 2018 behind them and look forward to 2019. The previous year saw the value of Bitcoin and other cryptocurrencies plummet by 70 percent or even more. People who jumped onto the crypto bandwagon late lost a great deal of money, but there have been other consequences as well. The bearish market has also hurt manufacturers associated with cryptocurrency mining, such as Nvidia. The maker of GPUs is now facing multiple class action lawsuits.
Nvidia Hurt by Lowering Prices
The vast majority of 2018 was great for cryptocurrency miners and those associated with the industry. Demand for GPUs was sky high, and this demand led to inflated prices. Gamers were angry as the GPUs they were looking for to power their gaming rigs were being snapped up by crypto miners.
One of the big movers and shakers in this GPU arena is Nvidia. Their stock rose quite a bit as the demand for GPUs blew up. However, there was a concern by investors that an eventual downturn would have severe negative repercussions on the company and its stock price.
To that end, the company said there was nothing to worry about. They told their worried investors that they were “masters at managing” the market, which meant any drop in cryptocurrency mining demand would not impact their bottom line.
Needless to say, this did not hold true. The market for GPUs crashed, which left Nvidia holding the bag with a massive amount of inventory they could not move. As their revenue is pretty much solely based upon GPUs, this caused their stock price to drop by more than 50 percent.
Investors that took the company at their word are not happy, and they are seeking damages in court.
The company is being hit with a number of class action lawsuits over this situation. There are currently at least four such lawsuits moving forward. One of them is being handled by the Schall Law Firm, who says that the company is liable for making false statements to their investors.
The law firm says:
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.
Before you get excited and try to jump into the action, it should be noted that the lawsuit is only open to those investors who lost $100,000 or more. One wonders if the courts will consolidate all the lawsuits together, not to mention what the eventual outcome will be.
What do you think of Nvidia getting sued by investors? Let us know in the comments below.
Images courtesy of Pixabay.