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I don't quite get this. Was it not blatantly obvious to everybody that Nvidia's sales were largely driven by cryptominers? Did they specifically market to crypt

by mcv 4y ago

I don't quite get this. Was it not blatantly obvious to everybody that Nvidia's sales were largely driven by cryptominers? Did they specifically market to cryptominers and lie about that or something? I don't quite get what they did wrong. What's also baffling to me is how their share price is taking a nosedive because of this news. Any investor should know about this. And $5 million fine doesn't sound like enough to hurt the company that much. But if it's true that they misled investors, does that mean that investors can get their money back or something? It seems like any investor who wasn't aware of this is now screwed twice.

cormacrelf 4y ago
Not putting “blatantly obvious” things in the disclosure documents is WORSE than omitting obscure things. The market for Nvidia stock is not made up of the same people who buy their graphics cards. Maybe even almost no crossover. The prospectus regime for public companies is there to protect ordinary investors who do not know this stuff. The overall effect is to increase the “smartness of money” by avoiding people investing who do not know this basic stuff. And yes there is a robust regime for investors to sue for defrauding them in this fashion.
- dhzhzjsbevs 4y ago
  The more I learn about finance the more I'm confused how 2008 actually happened. We actually have some pretty good regulations in place.
  - cormacrelf 4y ago
    A lot of it is designed really well but squashing human stupidity on the scale of trillion dollar economies is a perpetual game of whack-a-mole. The message a lot of people got from 2008 that it was the bankers and the system that hurt the little guy and therefore we should no longer trust any of it. And create a new financial parallel universe in which to rediscover why regulation is needed in the first place. Vitalik Buterin today literally suggested an analogue of FDIC insurance for cryptocurrency banks. My view is that the banks did hugely mess up and did not face enough consequences — and the correct approach is to massively enhance enforcement. (In many ways that actually has happened.) But moreover they preyed on stupidity, just massive massive stupidity that will always be there to contend with. Fraud always looks better than real investments to the marks. People have to overlook the shady parts, and to make them do that a product must offer unrealistic returns. Millions and millions of people are not smart enough to tell when that’s happening to them. As long as the SEC and its ilk let these run, people get hurt and everyone suffers, either personally, or from the inefficiency of fraud generally or the collapse of interlinked financial systems when the fraud gets big enough. Dealing with this is a huge task and often unpopular. If you tell millions of Americans they can’t invest in crypto scams, many of them will be royally pissed off, because they were promised riches! That’s even worse than whack-a-mole — letting frauds off the leash for one minute leaves your hands tied unless you are top of your game and have a lot of built up trust. That’s why people keep pointing to the lack of arrests as a huge failure of 2008. As mistakes by government go it was much worse than the bailout, which was rather necessary to limit the damage. It meant people thought the government was in on it, or that they didn’t care. Frankly I think Bitcoin would never have taken off if there were a slew of high profile arrests. It would not have seemed necessary.
  - rfw300 4y ago
    It’s worth noting many of these regulations came into existence (or became stringently enforced) because of 2008.
    - dangerface 4y ago
      The regulations in this case are both very old, I don't think the regulators care about 2008. Securities Exchange Act of 1934 Securities Act of 1933
  - einpoklum 4y ago
    > We actually have some pretty good regulations in place. That's only if your basic view of the financial markets is of something legitimate and socially beneficial. I would say that is mostly not the case; and in the past, the US government at times needed to recognize this at least partly, on pain of mass upheaval and system collapse, putting stronger regulation in place, e.g.: https://www.federalreservehistory.org/essays/glass-steagall-act https://www.federalreservehistory.org/essays/glass-steagall-... (which isn't that strong either) This is all before the complex derivative markets formed which gave rise to the 2008 crash. The housing situation in the US even now seems rather tenuous and volatile, whether through some financial crash or a different form of crisis: https://slate.com/business/2021/06/blackrock-invitation-houses-investment-firms-real-estate.html https://slate.com/business/2021/06/blackrock-invitation-hous...
- Jon_Lowtek 4y ago
  People suing nvidia about their 2018 quarterly reports is actually what happened, the SEC fining them years later is just the cherry on top. See for example case 18-cv-7669 by the "Ironworkers Local 580 Joint Fund" from late 2018, which was later merged with a class action lawsuit. Nvidia talked about crypto in their 2018 quarterly filings but they allegedly downplayed the effect on the company. Analysts upgraded their rating, growth prediction of 17%, shares trading at record price. (for the time, not comparable to today) In the last quarter of 2018 crypto crashed, nvidia revenue dropped by 7%, and the share price by 29%
- dangerface 4y ago
  > The market for Nvidia stock is not made up of the same people who buy their graphics cards. Maybe even almost no crossover. I think this is the problem you have investors buying stock in a company they have no concept what that company does they just know its a hot stock because the price is currently pumping. They go all in with no due diligence assuming the price will continue to pump for no reason and when it doesn't and the supply demand level out they act like they where scammed like the company should have told them when to buy and sell.
bionsystem 4y ago
If you have a publicly-listed company you have to disclose all macro, market, and sector/industry risks (as well as company-specific risk) that might impact investors. The mere fact that they didn't disclose it (in 2018) is blamable. Their stock price doesn't tank on this news, it's trending down along with BTC and other crypto assets. The market isn't stupid, it's pricing into NVDA price the risk of cryptos going into a prolonged bear market. Investors will probably never get their money back. First of all, NVDA stock is up a ton since 2018, and second of all, shareholders are considered full risk-on and should diversify. Class actions are possible but highly improbable to work. The company has been buying their stock back too which show their commitment to reward shareholders as well.
Slartie 4y ago
It was obvious to the gamers who tried to buy a GPU for a reasonable price. If you put some time into this endeavor, you were bound to see all those cards coming in to retailers immediately being bought, with a few appearing on secondary markets at higher price tags but being bought away very quickly there as well. This occurring in parallel with a huge bunch of "looking for GPUs A, B, C, D, offering $ridiculous_price in cash, will take any number of cards" offerings on Craigslist and similar platforms speaks a clear language: nobody is trying to secure various different GPUs despite high prices in basically unlimited numbers for GAMING! Nor do gamers buy up all those overpriced secondary market offerings within minutes of them being posted. But: the stock market investors that are moving the really big bags of cash rarely have hours and days to spend trying to hunt down GPUs for their gaming rigs. So they wouldn't see these obvious hints.
- BlueTemplar 4y ago
  And it's still not over - early 2022 prices for RX 580 (and the like) were still 4 (FOUR !) times higher than in 2020 ! https://web.archive.org/web/20220126135425if_/https://cdna.pcpartpicker.com/static/forever/images/trends/2022.01.26.gpu.chipset.radeon-rx-580.ad8def4c080f0d3887256726c073813e.png https://web.archive.org/web/20220126135425if_/https://cdna.p... EDIT : Never mind, still 2x prices, but seems to start coming down ? https://cdn.wccftech.com/wp-content/uploads/2018/04/Asus-RX-580-8GB-price-history.png https://cdn.wccftech.com/wp-content/uploads/2018/04/Asus-RX-...
  - latchkey 4y ago
    This is because RX480/580 are the most ROI efficient. ETH mining doesn't require latest fastest hardware because it is memory bound [1]. [1] https://www.vijaypradeep.com/blog/2017-04-28-ethereums-memory-hardness-explained https://www.vijaypradeep.com/blog/2017-04-28-ethereums-memor...
- MrFoof 4y ago
  I managed to get some GPUs at MSRP over that period and as I got something a bit faster over that period, I would sell to defray my upgrade cost. I tried to restrict to US buyers to try to get it in the hands of someone who just wanted to play games. They went to US addresses as my shipping restrictions and other exclusions required, but I unexpectedly got dinged for “International Fees” by eBay. So I dug in as to why. When I checked the shipping address in Google Maps, they were warehouses. Googling again, known freight forwarders. From what I can ascertain, one likely went to Qatar, and the other ended up in Uzbekistan. The accounts that bought them were quite old, not new, and had extremely high quantities of feedback. Based on the absolutely extreme auction end prices ($1540 for a 3070!), I wasn’t surprised in the end. The buyers were clearly extremely well organized and had exceptionally professional communication.

by mcv 4y ago

cormacrelf 4y ago

Not putting “blatantly obvious” things in the disclosure documents is WORSE than omitting obscure things. The market for Nvidia stock is not made up of the same people who buy their graphics cards. Maybe even almost no crossover. The prospectus regime for public companies is there to protect ordinary investors who do not know this stuff. The overall effect is to increase the “smartness of money” by avoiding people investing who do not know this basic stuff. And yes there is a robust regime for investors to sue for defrauding them in this fashion.

dhzhzjsbevs 4y ago
The more I learn about finance the more I'm confused how 2008 actually happened. We actually have some pretty good regulations in place.
- cormacrelf 4y ago
  A lot of it is designed really well but squashing human stupidity on the scale of trillion dollar economies is a perpetual game of whack-a-mole. The message a lot of people got from 2008 that it was the bankers and the system that hurt the little guy and therefore we should no longer trust any of it. And create a new financial parallel universe in which to rediscover why regulation is needed in the first place. Vitalik Buterin today literally suggested an analogue of FDIC insurance for cryptocurrency banks. My view is that the banks did hugely mess up and did not face enough consequences — and the correct approach is to massively enhance enforcement. (In many ways that actually has happened.) But moreover they preyed on stupidity, just massive massive stupidity that will always be there to contend with. Fraud always looks better than real investments to the marks. People have to overlook the shady parts, and to make them do that a product must offer unrealistic returns. Millions and millions of people are not smart enough to tell when that’s happening to them. As long as the SEC and its ilk let these run, people get hurt and everyone suffers, either personally, or from the inefficiency of fraud generally or the collapse of interlinked financial systems when the fraud gets big enough. Dealing with this is a huge task and often unpopular. If you tell millions of Americans they can’t invest in crypto scams, many of them will be royally pissed off, because they were promised riches! That’s even worse than whack-a-mole — letting frauds off the leash for one minute leaves your hands tied unless you are top of your game and have a lot of built up trust. That’s why people keep pointing to the lack of arrests as a huge failure of 2008. As mistakes by government go it was much worse than the bailout, which was rather necessary to limit the damage. It meant people thought the government was in on it, or that they didn’t care. Frankly I think Bitcoin would never have taken off if there were a slew of high profile arrests. It would not have seemed necessary.
- rfw300 4y ago
  It’s worth noting many of these regulations came into existence (or became stringently enforced) because of 2008.
  - dangerface 4y ago
    The regulations in this case are both very old, I don't think the regulators care about 2008. Securities Exchange Act of 1934 Securities Act of 1933
- einpoklum 4y ago
  > We actually have some pretty good regulations in place. That's only if your basic view of the financial markets is of something legitimate and socially beneficial. I would say that is mostly not the case; and in the past, the US government at times needed to recognize this at least partly, on pain of mass upheaval and system collapse, putting stronger regulation in place, e.g.: https://www.federalreservehistory.org/essays/glass-steagall-act https://www.federalreservehistory.org/essays/glass-steagall-... (which isn't that strong either) This is all before the complex derivative markets formed which gave rise to the 2008 crash. The housing situation in the US even now seems rather tenuous and volatile, whether through some financial crash or a different form of crisis: https://slate.com/business/2021/06/blackrock-invitation-houses-investment-firms-real-estate.html https://slate.com/business/2021/06/blackrock-invitation-hous...
Jon_Lowtek 4y ago
People suing nvidia about their 2018 quarterly reports is actually what happened, the SEC fining them years later is just the cherry on top. See for example case 18-cv-7669 by the "Ironworkers Local 580 Joint Fund" from late 2018, which was later merged with a class action lawsuit. Nvidia talked about crypto in their 2018 quarterly filings but they allegedly downplayed the effect on the company. Analysts upgraded their rating, growth prediction of 17%, shares trading at record price. (for the time, not comparable to today) In the last quarter of 2018 crypto crashed, nvidia revenue dropped by 7%, and the share price by 29%
dangerface 4y ago
> The market for Nvidia stock is not made up of the same people who buy their graphics cards. Maybe even almost no crossover. I think this is the problem you have investors buying stock in a company they have no concept what that company does they just know its a hot stock because the price is currently pumping. They go all in with no due diligence assuming the price will continue to pump for no reason and when it doesn't and the supply demand level out they act like they where scammed like the company should have told them when to buy and sell.

bionsystem 4y ago

If you have a publicly-listed company you have to disclose all macro, market, and sector/industry risks (as well as company-specific risk) that might impact investors. The mere fact that they didn't disclose it (in 2018) is blamable. Their stock price doesn't tank on this news, it's trending down along with BTC and other crypto assets. The market isn't stupid, it's pricing into NVDA price the risk of cryptos going into a prolonged bear market. Investors will probably never get their money back. First of all, NVDA stock is up a ton since 2018, and second of all, shareholders are considered full risk-on and should diversify. Class actions are possible but highly improbable to work. The company has been buying their stock back too which show their commitment to reward shareholders as well.

Slartie 4y ago

It was obvious to the gamers who tried to buy a GPU for a reasonable price. If you put some time into this endeavor, you were bound to see all those cards coming in to retailers immediately being bought, with a few appearing on secondary markets at higher price tags but being bought away very quickly there as well. This occurring in parallel with a huge bunch of "looking for GPUs A, B, C, D, offering $ridiculous_price in cash, will take any number of cards" offerings on Craigslist and similar platforms speaks a clear language: nobody is trying to secure various different GPUs despite high prices in basically unlimited numbers for GAMING! Nor do gamers buy up all those overpriced secondary market offerings within minutes of them being posted. But: the stock market investors that are moving the really big bags of cash rarely have hours and days to spend trying to hunt down GPUs for their gaming rigs. So they wouldn't see these obvious hints.

BlueTemplar 4y ago
And it's still not over - early 2022 prices for RX 580 (and the like) were still 4 (FOUR !) times higher than in 2020 ! https://web.archive.org/web/20220126135425if_/https://cdna.pcpartpicker.com/static/forever/images/trends/2022.01.26.gpu.chipset.radeon-rx-580.ad8def4c080f0d3887256726c073813e.png https://web.archive.org/web/20220126135425if_/https://cdna.p... EDIT : Never mind, still 2x prices, but seems to start coming down ? https://cdn.wccftech.com/wp-content/uploads/2018/04/Asus-RX-580-8GB-price-history.png https://cdn.wccftech.com/wp-content/uploads/2018/04/Asus-RX-...
- latchkey 4y ago
  This is because RX480/580 are the most ROI efficient. ETH mining doesn't require latest fastest hardware because it is memory bound [1]. [1] https://www.vijaypradeep.com/blog/2017-04-28-ethereums-memory-hardness-explained https://www.vijaypradeep.com/blog/2017-04-28-ethereums-memor...
MrFoof 4y ago
I managed to get some GPUs at MSRP over that period and as I got something a bit faster over that period, I would sell to defray my upgrade cost. I tried to restrict to US buyers to try to get it in the hands of someone who just wanted to play games. They went to US addresses as my shipping restrictions and other exclusions required, but I unexpectedly got dinged for “International Fees” by eBay. So I dug in as to why. When I checked the shipping address in Google Maps, they were warehouses. Googling again, known freight forwarders. From what I can ascertain, one likely went to Qatar, and the other ended up in Uzbekistan. The accounts that bought them were quite old, not new, and had extremely high quantities of feedback. Based on the absolutely extreme auction end prices ($1540 for a 3070!), I wasn’t surprised in the end. The buyers were clearly extremely well organized and had exceptionally professional communication.