Super Micro Computer Stock Plummets on Disappointing Earnings Outlook
Uncertainty Surrounds Auditor Resignation and Accounting Irregularities
Super Micro Computer’s stock took a nosedive in after-hours trading on Tuesday, plummeting over 10% after the company’s lackluster earnings outlook failed to meet Wall Street’s expectations. The disappointing forecast was compounded by the company’s ongoing struggle to file its 10-K annual report, which has been delayed since August 28.
Earnings Miss and Sales Forecast Fall Short
The company’s adjusted earnings per share projection of $0.56 to $0.65 for its fiscal second quarter fell short of the $0.80 consensus estimate, according to Bloomberg data. Meanwhile, its net sales forecast of $5.5 billion to $6.1 billion was weaker than the $6.79 billion anticipated by Wall Street.
Analyst Weighs In on Revenue Concerns
Wedbush Securities equity research analyst Matt Bryson noted that Super Micro’s revenue struggles are a major concern. “It looks like revenues aren’t where they wanted them to be, either for the quarter they just reported or moving forward,” Bryson said. He also emphasized that the uncertainty surrounding the company’s next auditor and the delayed 10-K filing remain significant headwinds for the stock.
Ernst & Young Resignation Raises Red Flags
The earnings report came on the heels of accounting firm Ernst & Young’s resignation as Super Micro’s auditor. EY cited its unwillingness to be associated with the company’s financial statements prepared by management. In response, Super Micro released a statement from an independent special committee investigating the allegations, concluding that there was no evidence of fraud or misconduct on the part of management or the Board of Directors.
Hindenburg Research Allegations and DOJ Investigation
The controversy surrounding Super Micro Computer began in June when Hindenburg Research published a short report alleging accounting manipulation, among other issues. The firm also disclosed it had taken a short position in Super Micro. The US Department of Justice has since launched an investigation into the company, reportedly in its early stages.
Super Micro’s Troubled Past Six Months
Following the Hindenburg report, Super Micro delayed the filing of its annual report, sending the stock nearly 20% lower on August 28. Since then, shares have plummeted over 60% in the past six months, erasing earlier gains fueled by investor enthusiasm for the company’s prospects in the AI data center space.
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