Server Maker Super Micro Plunges 18% Amid Disappointing Financials and Nasdaq Listing Concerns
Super Micro, a leading server manufacturer, saw its stock plummet 18% on Wednesday to its lowest level since June last year, wiping out approximately $57 billion in market capitalization. The company’s shares dropped to $22.70, down 81% from its peak in March.
Disappointing Financials and Lack of Transparency
Super Micro’s unaudited financial results fell short of expectations, and the company failed to provide a clear plan to maintain its Nasdaq listing. The lack of transparency has raised concerns among investors and analysts, leading to a sell-off in the stock.
Resignation of Auditor Ernst & Young
The company’s auditor, Ernst & Young, resigned last week, citing concerns over accounting irregularities and potential export control violations. This marks the second time an auditor has bowed out in under two years, further eroding investor confidence.
Nasdaq Listing at Risk
Super Micro has not filed audited financials since May and faces delisting by Nasdaq if it fails to report results for the latest fiscal year to the SEC by mid-November. The company’s CEO, Charles Liang, said they are actively seeking a new auditor, but analysts remain skeptical about the company’s ability to overcome its challenges.
Preliminary Results and Guidance
Despite the setbacks, Super Micro reported net sales of between $5.9 billion and $6 billion for the quarter ending September 30, up 181% year-over-year. However, the guidance for the December quarter was below estimates, with revenue expected to be between $5.5 billion and $6.1 billion.
Relationship with Nvidia
Super Micro’s business has been booming due to its partnership with Nvidia, shipping servers packed with Nvidia’s processors for artificial intelligence. CEO Liang emphasized the company’s strong relationship with Nvidia, but analysts questioned whether other server makers might receive additional capacity or allocations of Nvidia GPUs at Super Micro’s expense.
Investigation and Remedial Measures
The company’s board of directors has commissioned a special committee to investigate Ernst & Young’s concerns. The committee found no evidence of fraud or misconduct from management, but recommended remedial measures to strengthen internal governance and oversight functions.
Uncertainty Ahead
Super Micro’s future remains uncertain, with analysts suspended coverage of the stock due to a lack of full financial details and audited statements. As the company works to become current with its financial reporting, investors will be closely watching for signs of improvement.
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