Super Micro Computer Inc. is racing against the clock as it faces significant pressures concerning its continued listing on the Nasdaq exchange. With the deadline approaching for the company to either file its overdue 10-K annual report or submit a compliance plan to Nasdaq, there’s growing concern among investors about what this means for the company's future. That deadline is now set for Monday, November 18, following a brief extension from the original November 16 date. The situation has investors holding their breath as time runs out.
The company first announced its filing delay back in August, when it was rocked by allegations from short-seller Hindenburg Research, which highlighted accounting irregularities and potential governance issues. The situation escalated when Ernst & Young LLP, the firm's auditor, resigned shortly thereafter, citing concerns over governance and transparency as reasons for their departure. Adding fuel to the fire, Super Micro is currently under investigation by the U.S. Department of Justice, which is examining the company's business practices.
Compounding its troubles, Super Micro released more disappointing news this week, stating it would postpone its quarterly 10-Q filing for the fiscal quarter ending September 30. The company has, though, assured analysts, including Matt Bryson from Wedbush, who speculated on Bloomberg, claiming their internal review is nearing completion and might influence their decision on hiring new auditors and filing necessary reports.
The stock market’s reaction to these unveiled issues has been brutal; shares of Super Micro have plummeted around 70% over the past three months, and it's down roughly 85% from its peak back in March—erasing over $55 billion from its market value. Analysts now warn of the severe repercussions Super Micro could face. If Nasdaq does not approve the company's compliance plan, it might not only struggle to maintain its status but could also become delisted. Without the ability to trade on Nasdaq, liquidity for its shares would suffer dramatically and, even more critically, it could be thrown out of the S&P 500 index, which it had just been added to this year.
If things don’t change for the company soon, it could be forced to repay $1.725 billion worth of its bonds sooner than expected. This dire prediction doesn't just affect Super Micro's numbers; it has substantial ripples across the tech industry, especially as it serves as Nvidia's third-largest customer and heavily uses vendor financing from them. Only recently has the company indicated promising revenue streams thanks to the artificial intelligence (AI) boom, projecting quarterly numbers between $5.5 billion and $6.1 billion but falling significantly short of Wall Street's expectations of nearly $6.8 billion.
Last time Super Micro found itself under threat of delisting was back in 2019, when the company was removed for similar accounting issues. They bounced back after settling with the SEC for $17.5 million, doing so without admitting any wrongdoing. Following their earlier 2024 success—the stock was buoyed by AI demand and the inclusion within the S&P 500—it seemed like Super Micro was on track for recovery. Yet, as ominous clouds gather once more over this tech company, the scene is anything but certain.
With the compliance deadline looming, the tech industry watches closely along with investors who are feeling jittery about their positions. Super Micro is at a pivotal moment—both financially and operationally. The coming week will not only determine its Nasdaq fate but perhaps set the course for its future as part of the AI-driven tech revolution.
Price Action: At the time of this report, shares of Super Micro are trading at $17.64, down roughly 2% intraday, and show no signs of recovering from the steep fall observed over the past three months.
Earlier, on November 15, 2024, Wall Street Pit stated stocks from Super Micro were down around 72% for the quarter and have declined 39% year over year.
Investors remain uneasy as they await the company's next moves. Super Micro's roadmap toward compliance, or the lack thereof, will contribute heavily to whether it remains listed on Nasdaq. Unless the company regains compliance imminently, the ramifications for its stature among tech firms could be severe, along with undeniable direct impacts on its investor trust.
