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Nvidia Forced to Issue "We're Not Enron" Memo as Bear Theories Spiral

MarketDash Editorial Team
13 days ago
Tech analyst Daniel Newman unloads on bearish theories swirling around Nvidia, calling it "viral stupidity" that forced the chipmaker to formally deny Enron-style fraud comparisons in a private memo to Wall Street.

When a company has to send out a memo explaining it's not committing massive accounting fraud, you know the internet has been having a moment. That's exactly where Nvidia Corp. (NVDA) found itself this week, prompting tech analyst Daniel Newman to unleash a frustrated tirade about the state of financial discourse.

The "Viral Stupidity" Defense

Newman, CEO of Futurum Group, didn't hold back on Tuesday when he took to X to express his bewilderment that a dominant tech company was being forced to address comparisons to one of history's most infamous corporate frauds.

"The fact $NVDA needed to even write a memo explaining it isn't 'Enron' is a testament to the power of viral stupidity," Newman wrote. He argued that such extraordinary defensive measures wouldn't be necessary if "garbage conspiracy nonsense didn't spread so easily."

It's a fair point. We've reached a strange place in market commentary when a chip company with transparent financials and actual products feels compelled to issue what amounts to a "We're Not Criminals" press release.

What the Memo Actually Said

According to reports obtained by Barron's, Nvidia's private memo to Wall Street analysts pushed back hard against the accounting fraud allegations. The company emphasized that its business is "economically sound" with transparent reporting practices.

The key line: "Unlike Enron, NVIDIA does not use Special Purpose Entities to hide debt and inflate revenue."

It's the kind of sentence you never want to write about your own company. Then again, it's also the kind of sentence that shouldn't need writing in the first place.

Enter Michael Burry

So how did we get here? Much of the intensified scrutiny comes from "Big Short" investor Michael Burry, who recently launched a newsletter attacking Nvidia's role in the AI boom.

Burry's comparison of choice: Cisco Systems Inc. (CSCO) during the dot-com crash. He also argued that Nvidia's $112.5 billion in share buybacks since 2018 added "zero" value because they merely offset dilution from employee stock compensation.

It's a provocative thesis from someone who famously called the housing crisis. But calling something overvalued is different from suggesting accounting fraud, which is where the conversation seems to have drifted in certain corners of the internet.

The Performance Numbers Tell a Different Story

While the bear theories swirl, Nvidia's actual stock performance has been anything but fraudulent-looking. Shares have climbed 31.99% year-to-date, handily outperforming the Nasdaq Composite's 18.63% return and the Nasdaq 100's 18.58% gain.

On Monday, the stock closed up 2.05% at $182.55 before dipping 1.50% in extended trading. Over the past year, shares have gained 34.21%.

The company maintains a stronger long-term price trend, though market data shows weaker momentum in the short and medium term, with a poor value ranking based on current metrics.

The Real Question

Newman's frustration gets at something bigger than just Nvidia. We're in an era where conspiracy theories and legitimate skepticism can blend together so seamlessly on social media that major corporations feel they need to issue formal denials of fraud accusations that have no actual regulatory basis.

Is Nvidia overvalued? That's a legitimate debate. Is the AI boom sustainable? Also worth discussing. But those conversations are different from suggesting the company is cooking its books Enron-style.

The fact that Nvidia felt compelled to clarify the distinction says something about how financial analysis travels through the internet age—and not necessarily something good.

Back to News

Nvidia Forced to Issue "We're Not Enron" Memo as Bear Theories Spiral

MarketDash Editorial Team
13 days ago
Tech analyst Daniel Newman unloads on bearish theories swirling around Nvidia, calling it "viral stupidity" that forced the chipmaker to formally deny Enron-style fraud comparisons in a private memo to Wall Street.

When a company has to send out a memo explaining it's not committing massive accounting fraud, you know the internet has been having a moment. That's exactly where Nvidia Corp. (NVDA) found itself this week, prompting tech analyst Daniel Newman to unleash a frustrated tirade about the state of financial discourse.

The "Viral Stupidity" Defense

Newman, CEO of Futurum Group, didn't hold back on Tuesday when he took to X to express his bewilderment that a dominant tech company was being forced to address comparisons to one of history's most infamous corporate frauds.

"The fact $NVDA needed to even write a memo explaining it isn't 'Enron' is a testament to the power of viral stupidity," Newman wrote. He argued that such extraordinary defensive measures wouldn't be necessary if "garbage conspiracy nonsense didn't spread so easily."

It's a fair point. We've reached a strange place in market commentary when a chip company with transparent financials and actual products feels compelled to issue what amounts to a "We're Not Criminals" press release.

What the Memo Actually Said

According to reports obtained by Barron's, Nvidia's private memo to Wall Street analysts pushed back hard against the accounting fraud allegations. The company emphasized that its business is "economically sound" with transparent reporting practices.

The key line: "Unlike Enron, NVIDIA does not use Special Purpose Entities to hide debt and inflate revenue."

It's the kind of sentence you never want to write about your own company. Then again, it's also the kind of sentence that shouldn't need writing in the first place.

Enter Michael Burry

So how did we get here? Much of the intensified scrutiny comes from "Big Short" investor Michael Burry, who recently launched a newsletter attacking Nvidia's role in the AI boom.

Burry's comparison of choice: Cisco Systems Inc. (CSCO) during the dot-com crash. He also argued that Nvidia's $112.5 billion in share buybacks since 2018 added "zero" value because they merely offset dilution from employee stock compensation.

It's a provocative thesis from someone who famously called the housing crisis. But calling something overvalued is different from suggesting accounting fraud, which is where the conversation seems to have drifted in certain corners of the internet.

The Performance Numbers Tell a Different Story

While the bear theories swirl, Nvidia's actual stock performance has been anything but fraudulent-looking. Shares have climbed 31.99% year-to-date, handily outperforming the Nasdaq Composite's 18.63% return and the Nasdaq 100's 18.58% gain.

On Monday, the stock closed up 2.05% at $182.55 before dipping 1.50% in extended trading. Over the past year, shares have gained 34.21%.

The company maintains a stronger long-term price trend, though market data shows weaker momentum in the short and medium term, with a poor value ranking based on current metrics.

The Real Question

Newman's frustration gets at something bigger than just Nvidia. We're in an era where conspiracy theories and legitimate skepticism can blend together so seamlessly on social media that major corporations feel they need to issue formal denials of fraud accusations that have no actual regulatory basis.

Is Nvidia overvalued? That's a legitimate debate. Is the AI boom sustainable? Also worth discussing. But those conversations are different from suggesting the company is cooking its books Enron-style.

The fact that Nvidia felt compelled to clarify the distinction says something about how financial analysis travels through the internet age—and not necessarily something good.