Analysis: Nvidia's Private Memo Refuting Michael Burry's Accounting Allegations

Nvidia issued a private memo to Wall Street analysts refuting accounting allegations from Michael Burry, who criticized the company’s stock-based compensation dilution and share repurchases [1]. The memo corrected Burry’s claim of $112.5 billion in repurchased shares since 2018 to $91 billion and defended employee equity grants [1]. Burry stands by his analysis, and the memo’s authenticity was confirmed by multiple Wall Street sources [1].

Reddit discussions reveal mixed reactions:

• Some users criticized the memo’s framing, noting that comparing to Enron sets a low bar [1].
• Others defended Nvidia, calling Burry a “grifter” who lacks accounting understanding and highlighting Nvidia’s strong profitability [1].
• A minority pointed out the headline’s sensationalism, as the memo does not explicitly mention Enron [1].

1. The memo’s indirect Enron comparison (as interpreted by Reddit users) has sparked negative sentiment among some investors, even as Nvidia addresses specific allegations.
2. Mixed reactions in the Reddit thread reflect broader market uncertainty about the validity of Burry’s claims versus Nvidia’s defense.
3. Nvidia’s perceived profitability (as noted in Reddit comments) serves as a key counterpoint to the accounting allegations, potentially mitigating negative sentiment.

• Risks
  : Ongoing scrutiny from Burry may lead to increased investor skepticism; the Enron comparison framing could damage Nvidia’s reputation among some stakeholders.
• Opportunities
  : Nvidia’s strong market position and profitability (as highlighted by Reddit users) may help maintain investor confidence despite the allegations.

Nvidia’s private memo addresses specific accounting claims from Michael Burry, but reactions are mixed. The memo’s authenticity is confirmed, but the framing of the response (as interpreted by Reddit users) has drawn criticism. Burry remains firm in his analysis, and Nvidia defends its accounting practices. Investors should consider both the allegations and Nvidia’s counterarguments alongside broader market sentiment.