Michael Burry Slams Nvidia’s Accounting after Q3 Blowout
The recent Q3 earnings report from Nvidia has sent shockwaves through the tech industry, with the company exceeding expectations and posting impressive revenue growth. However, not everyone is convinced by Nvidia’s stellar performance. Renowned investor Michael Burry, known for his scathing critiques of corporate accounting practices, has come out swinging against the company’s financial reporting. In a series of scathing tweets, Burry attacked Nvidia’s accounting practices, claiming that the company has been understating the true cost of stock-based compensation.
According to Burry, Nvidia’s real dilution since 2018 would be a staggering $112.5 billion, rather than the reported $20.5 billion. This massive discrepancy, Burry argues, would have a significant impact on the company’s earnings, potentially cutting them by a whopping 50%. This is a damning indictment of Nvidia’s accounting practices, and one that could have far-reaching consequences for the company’s stock price and reputation.
Burry’s critique of Nvidia’s accounting practices is not limited to stock-based compensation. He also flagged suspicious revenue recognition in the company’s circular AI deals, renewing his warnings of an AI bubble. Burry has long been skeptical of the hype surrounding artificial intelligence, and his latest comments suggest that he believes Nvidia’s AI-related revenue is not entirely above board.
The implications of Burry’s comments are significant. If Nvidia is indeed understating the cost of stock-based compensation, it could mean that the company’s financial performance is not as strong as it seems. This could have a major impact on investor confidence, potentially leading to a decline in the company’s stock price. Furthermore, if Burry’s allegations of suspicious revenue recognition are proven true, it could raise serious questions about the integrity of Nvidia’s financial reporting.
Nvidia’s Q3 earnings report was widely seen as a major success, with the company beating analyst expectations and posting significant revenue growth. However, Burry’s comments suggest that this success may be built on shaky ground. If the company is indeed engaging in questionable accounting practices, it could undermine the entire narrative surrounding its recent performance.
Burry’s critique of Nvidia’s accounting practices is not an isolated incident. The investor has a long history of speaking out against corporate malfeasance and accounting irregularities. His warnings about the housing market in 2008, for example, proved prescient, and his subsequent bets against the market earned him a significant profit.
In the case of Nvidia, Burry’s comments are particularly noteworthy given the company’s position at the forefront of the AI revolution. As one of the leading players in the field, Nvidia’s financial performance is seen as a bellwether for the entire industry. If the company is indeed engaging in questionable accounting practices, it could have far-reaching consequences for the entire tech sector.
It’s worth noting that Burry’s comments are not without controversy. Some have accused him of being overly negative and pessimistic, and of having a vested interest in seeing Nvidia’s stock price decline. However, given his track record of speaking out against corporate malfeasance, it’s difficult to dismiss his comments outright.
In conclusion, Michael Burry’s critique of Nvidia’s accounting practices is a significant development that could have far-reaching consequences for the company and the tech industry as a whole. If Burry’s allegations are proven true, it could undermine the narrative surrounding Nvidia’s recent success and raise serious questions about the integrity of the company’s financial reporting. As the situation continues to unfold, investors and industry watchers will be closely monitoring Nvidia’s response to Burry’s comments and the potential implications for the company’s stock price and reputation.
News Source: https://stocktwits.com/news-articles/markets/equity/michael-burry-tears-into-nvidia-after-q3/cLPAPKIRE9e
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