According to reports, Nvidia’s investor relations team argued that the company is not committing fraud in the same manner as Enron. A distinct dot-com metaphor is being used by Michael Burry.
There seems to be a verbal sparring match between Nvidia and Michael Burry, the well-known investor who was featured in The Big Short for identifying the subprime bubble.
Barron’s claims that Nvidia’s investor relations team wrote a statement to Wall Street analysts disputing some of Burry’s recent criticisms of the graphics chipmakers, covering everything from accounting procedures to the company’s usage of stock-based pay. However, the chipmaker is undoubtedly worried about the latter issue and the idea that it is using vendor finance to boost demand.
“NVIDIA does not resemble historical accounting frauds because NVIDIA’s underlying business is economically sound, our reporting is complete and transparent, and we care about our reputation for integrity,” the document stated, according to Barron’s. “Unlike Enron, NVIDIA does not use Special Purpose Entities to hide debt and inflate revenue.”
Burry is refusing to back down after disclosing bets against Palantir and Nvidia using put contracts.
“To refute my claims regarding SBC and depreciation, Nvidia sent a note via email to sell-side analysts on Wall Street. “I stand by my analysis,” he declared on Cassandra Unchained, his brand-new and extremely popular Substack. Furthermore, I’m not saying that Nvidia is Enron. Cisco is unmistakably involved.
During the dot-com bubble, Cisco (CSCO) temporarily had the title of most valuable business in the world—a title that Nvidia currently holds—but it was not an accounting scam. Although it is currently the 28th largest firm in the S&P 500, Cisco, which, like Nvidia, laid the foundation for a new technology, is still in business.
Despite Monday’s increase, Nvidia’s stock (NVDA) is down roughly 14% from its peak in late October.
