Super Micro Computer (SMCI) faces a Monday deadline for filing a plan with Nasdaq to regain compliance with its financial reporting requirements or get delisted from the exchange. SMCI stock wavered on Friday.
Meanwhile, many Wall Street analysts believe SMCI stock is simply too radioactive to touch right now.
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“We believe it is difficult to have a strong stance on SMCI until either: 1) downside risk is minimized with either the company approaching prior valuation lows matching 2018 or worst-case scenarios play out minimizing future downside risk, or 2) more details are available including a path to SMCI resolving its current issues,” Wedbush Securities analyst Matt Bryson said in a client note Friday. He has a neutral rating on SMCI stock.
Super Micro’s fortunes have changed significantly from earlier this year when SMCI stock rocketed on the artificial intelligence boom, along with AI chipmaker Nvidia (NVDA).
SMCI stock hit an all-time high of 122.90 on March 8 before its troubles started.
On the stock market today, SMCI stock rose 3.2% to close at 18.58. Earlier in the session, it was down as much as 4.2% to 17.25.
Super Micro Timeline Of Troubles
Super Micro stock suffered its first setback this year in late March when the data center specialist announced a stock offering at a discount to its share price at the time.
Then, on April 19, it announced a date for its next quarterly earnings report without giving preliminary results, as it had done in prior quarters. SMCI stock plunged in a huge sell signal, IBD reported.
On April 30, Super Micro beat estimates for earnings in the March quarter but its sales came in light. SMCI stock tumbled after the report.
On Aug. 6, the San Jose, Calif.-based company missed analyst estimates for the June quarter and offered mixed guidance for the September quarter.
Super Micro’s troubles spiraled on Aug. 27 when short-seller Hindenburg Research accused the company of accounting manipulation, export control failures, customer issues and other problems.
A day later, Super Micro announced that it was delaying the filing of its annual report on form 10-K with the U.S. Securities and Exchange Commission.
In late September, the Wall Street Journal reported that the Justice Department is investigating Super Micro.
On Oct. 30, Super Micro disclosed in a regulatory filing that its accounting firm, Ernst & Young, had resigned over financial reporting concerns.
On Nov. 5, Super Micro cut its sales targets for the September and December quarters in a “business update.” It has yet to file its annual report or disclose September-quarter results.
SMCI Stock Delisting Fears
Because of the lack of financial disclosure, SMCI stock now faces delisting from the Nasdaq exchange.
After receiving a letter from the Listing Qualifications Department of the Nasdaq Stock Market on Sept. 17, Super Micro had 60 calendar days to submit a plan to Nasdaq to regain compliance with listing rules. The deadline is officially Saturday, but since it fell on a weekend, Super Micro will have until Monday to file, Barron’s reported.
A Wall Street Journal article on Friday suggested that the risk of Super Micro getting delisted is potentially greater than is being perceived. It also said the company might have difficulty finding a new auditor.
While those numerous issues swirl, competitors such as Dell Technologies (DELL) are stepping up to take market share from Super Micro in the AI data center hardware business.
On Thursday, Cisco Systems (CSCO) revealed that it is pushing into the AI server market, selling data center systems equipped with Nvidia chips.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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