AI darling Super Micro Computer could get booted off the Nasdaq as the stock plunges another 15%
2024-10-31 18:13:54
Shares of Super Micro Computer (SMCI) fell an additional 15% on Thursday, trading at $28 per share, following the resignation of auditor Ernst & Young. Although the server company joined the S&P 500 in March 2024, this year hasn’t been smooth, and now it faces potential delisting from the Nasdaq. After receiving a non-compliance letter in September, Super Micro has until November 16 to submit a plan to Nasdaq to regain compliance, or it could face delisting for the second time in five years.
Meanwhile, Mizuho Securities analyst Vijay Rakesh has maintained a neutral rating and a $45 stock price target amid concerns over the company’s internal financial controls.
The company faced a recent setback when its accountant, Ernst & Young, decided to resign after months of disagreement over Super Micro Computer’s governance practices and board independence.
The conflicts between Ernst & Young and Super Micro Computer began in late July, as the auditor raised concerns regarding the company’s internal financial controls, governance, and transparency. In response, Super Micro formed a special board committee to investigate the issues. But Ernst & Young ultimately concluded it could no longer stand behind the company’s financial statements.
In its resignation letter, EY said it was “unwilling to be associated with the financial statements prepared by management,” citing recent information that allegedly made it impossible to rely on representations from Super Micro’s executives and audit committee.
A rollercoaster year for SMCI
The San Jose-based IT company, which makes hardware that supports AI applications, thrived this year due to the high demand for AI and entered the Fortune 500 at No. 498. As a key partner and reseller of Nvidia’s (NVDA) GPUs and other components, Super Micro integrates its technology into its servers to support AI workloads. Super Micro CEO Charles Liang and Nvidia CEO Jensen Huang are both Taiwanese immigrants and have a long-standing relationship.
Super Micro Computer went through a rough phase in September when a short seller, Hindenburg Research, published a scathing report accusing the company of accounting red flags and questionable business dealings, including alleged sanctions evasion from exports to Russian and Chinese firms.
Following these accusations, Super Micro’s stock price took a significant hit. The company refuted the claims, stating that the report contained misleading and inaccurate information and that it would address the allegations in due course.
Despite the recent sharp downturn, the firm’s current price remains nearly 13% higher than it was a year ago.
