World Stock Watch

Super Micro Computer Shares Plummet: What’s Next?

Delayed Financial Report Sparks Concern

Super Micro Computer shares took a nosedive in extended trading on Wednesday, leading Nasdaq decliners, after the company announced it would delay filing its quarterly results. This news comes on the heels of a tumultuous period for the server maker, which has seen its stock lose over half its value since late October.

A History of Reporting Delays

The company’s reporting delays stem from the resignation of its auditor, Ernst Young, last month. This event flagged issues with Super Micro’s corporate governance and internal controls, casting a shadow over the company’s financial reporting. In October, Super Micro announced it couldn’t predict when it would file its 2004 annual report, a requirement it must meet to comply with Nasdaq listing rules.

Technical Analysis: Key Levels to Watch

Super Micro shares have been trading within an eight-month descending broadening formation before breaking down below the pattern’s lower trendline on above-average volume late last month. The stock’s sell-off has continued, with the relative strength index (RSI) moving below the 30 threshold, confirming bearish price momentum. However, the indicator’s oversold reading also increases the likelihood of a bargain-hunting bounce.

Support and Resistance Levels

Investors should keep a close eye on important support levels around $17 and $12, as well as key resistance levels near $23 and $30. The $17 level could provide support near a series of comparable trading levels prior to the late May 2023 breakaway gap. If the stock fails to hold this level, it could tumble to lower support around $12. Conversely, during an oversold bounce, the $23 level may encounter selling pressure near a trendline connecting multiple troughs that surfaced on the chart between June and October last year. A more bullish upside reversal could fuel a move to around $30.

What’s Next for Super Micro?

As investors navigate the uncertainty surrounding Super Micro’s financial reporting, they should closely monitor the stock’s response to these key levels. With the company’s reporting delays and governance issues weighing heavily on the stock, it remains to be seen whether Super Micro can regain investor confidence and turn its fortunes around.