Shares of Super Micro Computer (NASDAQ: SMCI) were surging today as investors awaited a plan from the company to stay in compliance with the Nasdaq and maintain its listing.
Following a delay in its 10-K filing, the Nasdaq told Supermicro in September that it was out of compliance with its standards and that it had two months to file the annual report or submit a plan to get back in compliance.
Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »
That deadline is expiring today, but investors were optimistic that it would submit a plan after Barron’s reported on Friday that it was on track to do so. As of 2:13 p.m. ET, the stock was up 23.4% on the news, though it had not yet submitted a plan.
At this point, today’s jump is just one small chapter in the larger drama around Supermicro, as the stock is still 60% from its peak before Hindenburg Research released a short report on the company, accusing it of accounting problems, which preceded its delay in filing its 10-K report.
In that context, it’s hard to see today’s gains as a real positive development for the company, at least until we see what the compliance plan includes.
In its preliminary third-quarter earnings report, the company also its special committee would release a report on remedial measures to improve its internal governance, by the end of last week, which it has not yet done.
Regardless of what is in the compliance plan, Supermicro still has a lot of work to do, as it must find an auditor, as well as file its 10-K and now its 10-Q for the first quarter, which it just said would be late.
The stock could recover, but investors shouldn’t mistake the stock’s rebound today and Friday for a meaningful turning point in this saga. Nothing’s changed yet with the company’s underlying financial reporting challenges. Until it does, the stock is best avoided.
Before you buy stock in Super Micro Computer, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Super Micro Computer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $870,068!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
