Super Micro Computer (SMCI) stock took a significant hit on Wednesday, plummeting as much as 26% after the company announced a delay in filing its annual report for the fiscal year that ended on June 30. This news came on the heels of allegations made by short seller Hindenburg Research, which claimed to have found evidence of “accounting manipulation” at the artificial intelligence company.
In a statement, Super Micro Computer stated that it was unable to file its Annual Report within the prescribed time period without unreasonable effort or expense. The company cited the need for additional time for management to complete its assessment of the design and operating effectiveness of its internal controls over financial reporting as of June 30, 2024.
The stock had experienced a meteoric rise earlier in the year, soaring from $290 in early January to about $1,200 by March. It was added to the S&P 500 in March and joined the Nasdaq 100 index in July. However, the stock is now down more than 60% from its peak in March, although it is still up 50% year to date. The company recently announced a 10-for-1 stock split effective October 1.
Hindenburg’s allegations and the subsequent delay in filing the annual report have raised concerns among investors and analysts. The stock fell about 2% on Tuesday following the release of Hindenburg’s report, which highlighted accounting red flags, undisclosed related party transactions, and other issues. Short sellers have capitalized on the stock’s decline, making over $1.07 billion in midday mark-to-market profits on Wednesday alone.
Super Micro Computer, a maker of data center servers and management software, had garnered attention from investors this year as it rode the AI wave. The company’s partnership with AI chipmaker Nvidia further fueled investor interest. However, Hindenburg’s report has cast a shadow over the company’s practices and management.
CFRA analysts downgraded the stock’s rating to Hold from Buy in light of the allegations, expressing concerns about potential reputational damage. The report highlighted Super Micro’s history of accounting violations and questionable business practices, despite a previous settlement with the SEC.
In conclusion, the recent developments surrounding Super Micro Computer have raised significant doubts about the company’s financial reporting and business practices. Investors and analysts are closely monitoring the situation as the stock continues to face volatility. The allegations made by Hindenburg Research have put the company under scrutiny, and the stock’s future performance remains uncertain.
