Super Micro Computer Soars on Auditor Hire and Filing Plan
The stock of Super Micro Computer (NASDAQ: SMCI) is experiencing a remarkable surge, up 30.7% as of 1:45 a.m. ET, following the company’s announcement of hiring BDO as its new financial auditor and submitting a financial-results filing plan to Nasdaq.
A Major Risk Factor Removed
This development comes as a huge relief to investors, as it prevents the stock from being delisted from the Nasdaq exchange, a major short-term risk factor that had been worrying investors.
BDO: A Solid Reputation
Supermicro’s hiring of BDO as its independent auditor is a significant positive development. As the fifth-largest public accounting firm in the world, BDO brings a solid reputation to the table, which is particularly important given the recent controversies surrounding Supermicro’s accounting practices.
A Troubled Past
In August, short-seller Hindenburg Research published a scathing report alleging repeated accounting violations, prompting Supermicro to delay the filing of its annual 10-K report. Furthermore, Ernst & Young (EY) resigned as the company’s financial results auditor in October, citing concerns over the reliability of statements made by Supermicro’s management team and auditing committee.
Moving Forward
With BDO now on board, Supermicro can presumably move forward with the filing of its delayed 10-K reports. The submission of the financial filing plan has also averted the immediate threat of delisting from the Nasdaq exchange, which would have led to reduced trading volume and visibility for investors.
Uncertainty Still Looms
While the company has avoided delisting for now, a potential delisting at a later date remains a possibility. Moreover, an investigation into Supermicro by the Department of Justice is reportedly underway, with some speculating that it may be related to financial reporting issues or export ban violations.
Investor Caution
Given the uncertainty surrounding the company, only investors with very high levels of risk tolerance should consider buying the stock at this time. It’s essential to carefully evaluate the risks and rewards before making a decision.
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