Shall Law Firm, an American shareholder rights litigation firm, has announced the filing of a class action lawsuit against Nvidia with regards to statements pertaining to the company’s outlook regarding the effect that declining cryptocurrency prices could have on the performance of its shares.
Nvidia is accused of making false and misleading statements to the market regarding assertions that a significant decline in demand for graphics processing units (GPUs) would not negatively impact the company’s operations and performance due to high demand from the gaming sector.
Schall Law Firm is currently encouraging investors who purchased Nvidia’s shares between Aug. 10, 2017, and Nov. 15, 2018, to contact the firm before Feb. 19, 2019, especially investors who incurred losses exceeding $100,000.
So what exactly happened?
Nvidia appears to have been significantly hit by the cryptocurrency bear trend, with the company having the worst performing stock in the S&P 500 of the fourth quarter of 2018 with a 54 percent loss in value.
“The crypto hangover has left the industry with excess inventory – excess channel inventory,” Nvidia’s chief executive officer, Jensen Huang, stated on a conference call at the time.
Because of this, the law firm believes that Nvidia touted its ability to monitor the cryptocurrency market and make rapid changes to its business as necessary. The firm also added that Nvidia made materially misleading comments throughout the six-month period.
Nvidia isn’t the only chip stock that fell due to the bear market of cryptocurrency. PHLX Semiconductor Sector Index, comprised of 30 companies including Nvidia, dropping 19 percent, and Advanced Micro Devices stock losing 45 percent. Many of the people in the trading community believes that the declining demand for mining hardware as a catalyst for Nvidia’s notably poor performance.