Key Points
- Federal court grants approval for securities class action against NVIDIA and CEO Jensen Huang to continue.
- Shareholders claim NVIDIA concealed substantial cryptocurrency mining GPU sales totaling over $1 billion.
- Legal documents suggest NVIDIA earned approximately $1.7 billion from cryptocurrency mining GPU transactions during the relevant timeframe.
- Shareholders maintain that GeForce gaming GPUs accounted for more than 65% of cryptocurrency-related demand.
- NVIDIA stock dropped approximately 28.5% across two consecutive trading days following the company’s revised guidance in 2018.
A U.S. federal court has granted permission for a securities class action lawsuit targeting NVIDIA and CEO Jensen Huang to advance. Shareholders contend the corporation masked more than $1 billion in cryptocurrency mining GPU sales. The litigation encompasses investor damages spanning from August 10, 2017, through November 15, 2018.
Federal Court Approves Shareholder Claims Against NVIDIA
The court authorized shareholders to advance allegations that NVIDIA mischaracterized cryptocurrency-focused GPU transactions. Shareholders maintain the corporation classified substantial mining revenue within its gaming operations. They contend this accounting method presented an inaccurate representation of consistent gaming sector performance.
Court filings suggest NVIDIA produced approximately $1.7 billion from cryptocurrency mining GPU transactions. Among that figure, an estimated $1.13 billion purportedly remained inadequately disclosed. Shareholders maintain this deficiency distorted revenue patterns and shaped market projections.
Legal documents reveal that GeForce gaming GPUs captured more than 65% of cryptocurrency-related demand. Shareholders contend that miners propelled a significant portion of the gaming division’s documented expansion. They further assert cryptocurrency demand generated approximately 83% of total GPU growth throughout the timeframe.
The presiding judge dismissed NVIDIA’s contention that its disclosures produced no market price effect. The decision indicates the corporation failed to refute shareholder allegations during this procedural phase. Consequently, the court permitted the matter to advance as a class action.
Disclosure Practices Under Scrutiny and Stock Performance
The controversy focuses on representations NVIDIA issued regarding gaming revenue performance. Shareholders allege the corporation failed to distinctly categorize cryptocurrency-influenced transactions. They maintain this approach concealed the unpredictability of mining-related demand.
During August 2018, NVIDIA revised its financial projections downward and referenced declining cryptocurrency demand. Subsequently, on November 15, 2018, the corporation disclosed diminished gaming revenue figures. Management attributed the underperformance to surplus inventory following cryptocurrency market contraction.
After that announcement, NVIDIA shares declined approximately 28.5% during two consecutive trading sessions. Shareholders claim the decrease demonstrated the market’s reevaluation of previous revenue statements. The court observed that the chronology reinforces the shareholders’ position.
A court hearing regarding the matter is set for April 21. The session will examine arguments concerning responsibility and compensation. The court will establish subsequent procedures following review of additional materials.
During 2022, the U.S. Securities and Exchange Commission imposed a $5.5 million penalty on NVIDIA. Regulatory authorities stated the corporation failed to acknowledge that cryptocurrency mining influenced gaming revenue figures. The SEC emphasized that shareholders required transparent information regarding revenue origins.
NVIDIA settled the SEC allegations without confirmation or rejection of the findings. The regulatory body indicated the omission breached disclosure obligations. The corporation remitted the $5.5 million fine as settlement terms.
Current market information indicates NVIDIA stock exchanges around $178.68. Shares have decreased roughly 9% during the preceding month. The class period covered by the lawsuit concludes on November 15, 2018.
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