Nvidia Memo Refuting Burry's Accounting Allegations: Market Impact & Risk Analysis

Nvidia released a private memo to Wall Street analysts refuting accounting allegations from Michael Burry, who criticized the company’s stock-based compensation dilution and share buyback practices [3]. The memo denied Enron-style fraud (no Special Purpose Entities) and corrected Burry’s claims about repurchased shares [1]. Market reaction showed a sharp drop of 7.81% on Nov20 (likely due to Burry’s allegations) followed by a rebound on Nov24 (+1.7% regular trading, +2.05% after-hours) [0]. Trading volume spiked to 343.5M and 346.93M shares on Nov20-21, indicating increased selling pressure [0]. Key data points include NVDA’s market cap of $4.44T (Nov24) and accounts receivable growth of 89% YoY—outpacing revenue growth of 63% [2].

Cross-domain connections reveal that Nvidia’s neocloud relationships (investing in companies that buy its chips) may create circular revenue streams [1]. Reddit discussions highlight mixed sentiment: some users criticized the memo’s Enron comparison as setting a low bar, while others defended Nvidia’s profitability [3]. The accounts receivable surge (89% YoY) vs revenue growth (63% YoY) suggests potential channel stuffing or collection risks [2].

1. Ballooning accounts receivable (89% YoY) outpacing revenue may impact cash flow [2].
2. Neocloud company distress could lead to used chip gluts and investment markdowns [1].
3. AI bubble correction risks for circular revenue streams [1].

• Core AI chip demand remains strong, supporting long-term profitability [3].
• Partial stock rebound indicates market confidence in Nvidia’s ability to address immediate concerns [0].

Critical data points:

• NVDA price range (Nov24): $176.48-$183.50 [0].
• High trading volume (Nov20-21):343.5M/346.93M shares [0].
• Market cap (Nov24):$4.44T [0].
• Accounts receivable growth:89% YoY vs revenue growth:63% YoY [2].

This summary provides objective context for decision-making without prescriptive recommendations