Super Micro Computer Stock Soars on Compliance Plan Submission
The AI server maker’s stock surged as much as 29% in premarket trade on Tuesday, following the submission of a compliance plan to the Securities and Exchange Commission (SEC) late Monday. This move aims to avoid delisting from the Nasdaq.
A Long-Awaited Filing
Investors had been eagerly waiting for the filing, which was hinted at in a Barron’s report on Friday. The report stated that Super Micro would submit its plan to prevent delisting by the deadline on Monday, citing people familiar with the matter. As a result, the stock experienced a significant surge of roughly 16% during regular trading on Monday.
New Auditor Hired
In addition to submitting the compliance plan, Super Micro also announced that it has hired a new auditor, BDO, replacing its prior accountant, EY, which resigned in late October.
Challenges Ahead
Despite this week’s surge, shares have still tumbled roughly 56% over the past three months. After gaining as much as 300% earlier this year, SMCI stock is now down over 20% in 2024. The company has been grappling with the fallout from an August report by short seller firm Hindenburg Research, which raised concerns about potential accounting malpractices, violations of export controls, and questionable relationships between top executives and Super Micro partners.
Delays and Investigations
Following the Hindenburg report, Super Micro delayed its annual 10-K filing to the SEC. Last week, the company also delayed filing its most recent quarterly 10-Q report to the SEC. Furthermore, the company is reportedly being investigated by the Department of Justice.
Earnings Disappointment
The barrage of bad news has sent shares tumbling. EY’s resignation, in particular, pushed Super Micro stock down more than 30% in a single day in late October. Shares of the company also fell sharply following Super Micro’s fiscal first quarter earnings report on November 5, which missed Wall Street’s expectations, sending shares down 18% in the day following the results.
Product Updates and Partnerships
On a more positive note, Super Micro announced product updates during the Supercomputing Conference in Atlanta, including its next-generation AI servers using Nvidia Blackwell chips. CEO Charles Liang highlighted the company’s expertise, delivery speed, and capacity to deploy large-scale AI data center projects.
Nvidia Earnings Ahead
Nvidia, a key partner of Super Micro, will report its earnings for its fiscal third quarter on Wednesday. Super Micro’s success has been closely tied to the growth of the artificial intelligence market, with the company’s adjusted earnings rising nearly 90% to $2.21 per share, and revenue soaring 110% to $15 billion in its fiscal year 2024. Analysts expect the company’s earnings to grow more than 40% in the 2025 fiscal year, while they see sales surging just over 70%.
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