Super Micro Computer Stock Has Dropped 60% on Troubling News. Here’s What You Need to Know After the Company’s Latest Update.
Super micro computer (NASDAQ: SMCI) He started the year as a star in the AI market. The equipment maker has been around for more than 30 years, selling servers and carrier bandwidth solutions, but has already seen profits increase as artificial intelligence (AI) booms. In recent quarters, Supermicro has reported triple-digit increases in revenue and high demand for its products. The company works together with Nvidia and other major chipmakers, and integrating their innovations into their equipment.
All of this helped the stock rise 2,000% over the past five years through 2023, and even outperformed Nvidia in the first half of this year, rising 188%. Then, in late August, problems began to weigh on this blue-chip stock. From a short report alleging problems at the company to the recent resignation of Supermicro’s auditor, these have been difficult times for Supermicro and its investors. Since the August 27 short report, the stock has fallen about 60%.
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More news arrived this week, as Supermicro released a preliminary, unaudited quarterly earnings report and general update. Here’s what you need to know before making any investment decisions.
First, let’s think about the elements that affected the stock. It all started with a short report from Hindenburg Research, alleging problems at the company such as “glaring red flags related to accounting.” Since it was Hindenburg Short position In the stock at the time of reporting, meaning he would benefit from declines in the stock, he was biased. This makes it impossible to rely entirely on Hindenburg as a source.
Meanwhile, Supermicro delayed the filing of its 10K annual report. This may not be an obvious reason to sell or avoid the stock, but it still weighs on investors’ minds.
Supermicro addressed both the Hindenburg report and the 10K delay in a letter to customers, offering encouraging words. Regarding the short report, Supermicro called the data “false or inaccurate,” and regarding the 10,000 delay, the company said it does not expect any significant changes to Q4 or full-year earnings.
But investors’ fears deepened when an article was published The Wall Street Journal Supermicro talked about a potential Justice Department investigation into Supermicro — Supermicro declined to comment — and when Ernst & Young resigned as Supermicro’s auditor.
Ernst & Young said in its resignation that it “will no longer be able to rely on the representations of management and the audit committee” and that it is “unwilling to be associated with the financial statements prepared by management.”
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