Supermicro Shares Soar on Clean Bill of Health
Accounting Practices Get a Thumbs Up
Shares of Supermicro, a leading server maker, surged nearly 30% on Monday after an independent review gave the company’s accounting practices a clean bill of health. This news comes as a welcome relief to investors who had been worried about potential accounting irregularities.
A Rocky Road
Earlier this year, Supermicro faced accusations of accounting-related anomalies, which led to delayed financial reports and concerns of a potential Nasdaq delisting. The situation was further complicated by the resignation of the company’s auditor in October. As a result, the stock plummeted as much as 86% from its early-March peak.
A Turnaround
However, after filing a compliance plan with the Nasdaq and announcing a new auditor, Supermicro’s shares have more than doubled from last month’s low. The company now expects to file its delayed financial results, easing investor concerns.
Technical Analysis
From a technical standpoint, Supermicro’s weekly chart shows a promising trend. The stock has reclaimed the lower trendline of a descending broadening formation that has been in play since early March. Moreover, above-average trading volumes have supported the move higher, indicating buying participation from larger market participants.
Key Price Levels to Watch
As Supermicro’s shares continue to rise, investors should keep an eye on several key price levels. The first overhead area to watch is around $50, which could provide resistance near the psychological round number. A decisive close above this level could see the shares climb to around $64, where selling pressure may occur near the August countertrend high. Further positive price action may fuel a rally up to the $97 area, where investors could look for exit points.
Support Levels
On the downside, investors should monitor two major support levels. The first major support level sits around $30, where a pullback could see investors seek buying opportunities near the top trendline of a five-month consolidation period. A more significant drop could see Supermicro shares retrace to the $23 level, which would likely provide support near the lower trendline of the consolidation period.
What’s Next?
As Supermicro continues to move forward, investors should keep a close eye on these key price levels and technical indicators. With the company’s accounting practices now cleared, the focus shifts to its financial performance and growth prospects. Will Supermicro be able to regain its footing as a leading AI darling? Only time will tell.
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