Super Micro Computer (SMCI), a major supplier of AI servers, has announced it won’t meet the deadline for filing its 10-Q report for the period ending Sept. 30. The delay is due to the need to find a new accounting firm to review its fiscal 2024 financials before it can complete its Q1 2025 filing. The company is also behind on filing its 2024 10-K report.
The news led to a 6.3% drop in SMCI stock, which closed at $20.33. On Nov. 5, Super Micro lowered its sales forecasts for the September and December quarters, further troubling investors.
Super Micro’s accounting firm, Ernst & Young, resigned in late October due to concerns about financial reporting, and the company is now facing a possible investigation by the U.S. Department of Justice. With its current financial struggles and lack of compliance, Super Micro is at risk of being delisted from Nasdaq if it fails to file its reports on time.
As of now, SMCI has dropped more than 83% from its peak in early August. The company, which is NVIDIA’s third-largest client, is now facing significant bankruptcy risks.
SMCI shares dropped approximately 9% in premarket trading, marking a 59% decline since Ernst & Young resigned as its auditor in October. The resignation followed concerns raised by EY regarding the company’s governance, transparency, and internal controls over financial reporting.
Earlier this month, the company stated that a special committee established to investigate the issues raised by EY in July had not uncovered any evidence of fraud.
On Wednesday, Super Micro announced that it requires more time to select a new auditor and for management to complete its assessment of internal controls over financial reporting, which is due by June 30, 2024.
Additionally, the Nasdaq informed the company on September 17 of its non-compliance with listing rules, giving it 60 days to file its annual report or submit a plan for regaining compliance.
This year, the shares have faced pressure due to concerns about its accounting practices, especially after Hindenburg Research revealed a short position in August, accusing the company of “accounting manipulation.”
SMCI Active Positions:
Held: Institutions currently hold 136 positions.
Increased: Institutions have increased their holdings in 733 positions.
Decreased: Institutions have decreased their holdings in 1,054 positions.
New and Sold Out Positions:
New: Institutions have initiated 239 new positions.
Sold Out: Institutions have completely sold out of 702 positions.
Overall, the data suggests that institutions have been more active in decreasing and selling out of positions in SMCI compared to increasing or initiating new positions.
Update, 18th November, 2024
Super Micro Computer’s shares rose 10% to $20.44 in premarket trading ahead of a Nasdaq deadline to submit a plan for regaining compliance with financial reporting rules. The company has not filed its 10-Q report for the previous fiscal year and recently lost its auditor, Ernst & Young, due to concerns over management’s representations. The deadline for filing the plan, originally set for Nov. 16, now falls on Monday, Nov. 18.
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