A U.S. district court has allowed a class action against Nvidia and its CEO to proceed. Investors allege the company concealed over $1 billion in crypto-related revenue within its gaming segment. The court found Nvidia failed to prove its statements did not affect its stock price, which fell significantly in 2018.
A U.S. district court has ruled that a class action lawsuit against Nvidia and CEO Jensen Huang can proceed. The investor claims allege the company misled them during the 2017-2018 crypto boom.
Plaintiffs first sued in 2018, alleging Nvidia hid around $1.3 billion in revenue from crypto mining GPU sales within its gaming business. They argue CEO Jensen Huang downplayed this demand in interviews.
Huang claimed crypto demand was “small” and provided only “an extra bit of juice.” The company also launched a special crypto chip reported under a separate mining revenue segment.
Investors argue this was done to convince them the gaming business was separate from mining operations. The company’s defense stated its statements were not intended to influence investors.
Judge Gilliam Jr. concluded Nvidia failed to prove its statements had no price impact. He cited an internal email as evidence the stock price remained high because of those earlier statements.
Nvidia‘s stock price fell 4.9% in August 2018 after it lowered revenue guidance and admitted miners bought gaming GPUs. The company later issued another revenue cut, citing falling crypto demand.
CFO Colette Kress admitted gaming revenues missed expectations due to unsold inventory. This caused the stock price to plummet by 28.5% over two trading sessions.
The SEC previously fined the company $5.5 million for failing to disclose crypto mining’s impact on revenue. Regulators stated it should have told investors most GPU demand came from miners.
The court has scheduled a hearing for the class action on April 21. The case centers on whether Nvidia‘s disclosures misled investors about its revenue sources.
