Super Micro Computer (SMCI) stock continued its rebound on Friday, with shares on track to post a weekly gain of 78%.
Shares of Super Micro — a maker of AI servers that uses Nvidia ( NVDA ) chips and has a major deal with Elon Musk’s xAI — rose more than 11% in Friday trading to about $33. Even with that gain, shares are still well below their highs of more than $120 in March after SMCI was added to the S&P 500.
The stock’s rally began Monday in anticipation of Super Micro filing a compliance plan with Nasdaq (^IXIC) as it looks to avoid a delisting. Shares rose significantly when the company officially announced that it had submitted the plan and appointed a new auditor, BDO. Super Micro’s former accountant, Ernst & Young, resigned in late October.
Super Micro faces August fallout a report by short-selling firm Hindenburg Research, which cited alleged improper accounting practices, export control violations, and suspicious relationships between senior executives and Super Micro partners. In the wake of the Hindenburg report, Super Micro delayed filing its annual 10-K and most recent quarterly 10-Q reports with the Securities and Exchange Commission, putting the company at risk of being delisted from the Nasdaq. Super Micro is also said to be in the works Investigation by the Ministry of Justice.
A deluge of bad news has dragged stocks down over the past few months. EY’s resignation, in particular, sent Super Micro shares down more than 30% in a single day in late October. The accountant wrote in his resignation letter that he was “unwilling to be associated with the financial statements prepared by Super Micro’s management.”
Adding to its woes, Super Micro’s fiscal first-quarter earnings report on November 5 missed Wall Street expectations. As Wedbush analyst Matthew Bryson wrote in a note to investors at the time, the company blamed the sales decline on delays in Nvidia’s Blackwell AI chips and issues with its filings with the Securities and Exchange Commission. Bryson maintains a Neutral rating on the stock and recently lowered his price target on shares to $24 from $32.
Other companies such as Barclays (BCS), Wells Fargo (WFC), and KeyBanc have suspended coverage of the stock.
Super micro He said on Monday It is in the process of filing late filings with the Securities and Exchange Commission “and updating its periodic reports within the discretionary period available to Nasdaq staff to grant them.”
“We view retaining a new auditor as an important positive step for SMCI as it perhaps resolves the more fundamental concerns regarding SMCI’s ability to remain listed…and potentially creates a path for SMCI to file its financial statements and restore compliance with the Nasdaq Stock Exchange.
He added that “even if the best-case scenario were to materialize, we believe EY’s resignation would still necessarily create some lingering concerns about the health of SMCI’s financials,” given concerns about the reported Justice Department investigation, and questionable relationships between Super Micro’s senior executives and its clients. Suppliers and its new accountant BDO regulatory issues.
Super Micro shares also benefited this week from Nvidia’s impressive earnings report and the company’s assurances that Blackwell production is on pace. Nvidia CEO Jensen Huang gave a shout-out to Super Micro during the AI chip maker’s earnings call, referring to SMCI as one of its “great partners.”
Friday’s stock move means SMCI short sellers are now down $1.4 billion in market losses since shares hit a year-to-date low of $18.01 on Nov. 14, according to data from S3 Partners.
“SMCI is turning into a squeeze stock, with short buying covering the arm with long-term buyers pushing SMCI’s share price higher,” Ihor Dusaniwski, managing director of S3 Partners, told Yahoo Finance.
Laura Bratton is a reporter for Yahoo Finance. Follow her on X @LauraBratton5.
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