- Supermicro stock plummeted 18% after disappointed quarterly unaudited financial update.
- The company has accused of revenue inflation and supply chain violations, lead to market distrust.
what happened
Super Micro‘s stock fell 18.14% on Wednesday, reaching its lowest level since June of last year, after the troubled server manufacturer released unimpressive unaudited financials and could not specify how it intended to maintain its Nasdaq listing.
The stock went down 81% from its peak in March to $22.70 in the early afternoon, wiping off around $57 billion in market capitalization.
Following the resignation of its auditor, Ernst & Young, the second accounting firm to leave in less than two years, Super Micro experienced its worst week on the market ever last week. An activist accuses the corporation of accounting problems and of breaking export rules by shipping sensitive chips to companies and countries that are sanctioned.
Super Micro hasn’t submitted audited financial statements since May, and if it doesn’t submit results to the SEC by the middle of November for the most recent fiscal year, Nasdaq may delist it. In releasing its first fiscal quarter preliminary data late Tuesday, the corporation stated that it is unsure of when it will submit its yearly financials.
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Why it’s important
The potential Nasdaq delisting of Supermicro (SMCI) has significant implications. The company’s struggle with regulatory compliance stems from delayed financial filings and the recent resignation of its auditor, Ernst & Young (EY), which raises questions about corporate governance and financial stability. Without a new auditor and updated filings, Supermicro faces a November 16 deadline imposed by Nasdaq to present a compliance plan. If the company fails to meet this deadline, Nasdaq could delist its shares, restricting access to public capital markets and potentially diminishing investor confidence.
Supermicro’s challenges have been compounded by recent allegations from Hindenburg Research, which accused the company of revenue inflation and supply chain violations involving shipments to restricted countries. This scrutiny has affected Supermicro’s reputation and could strain relationships with critical partners like Nvidia, which provides essential technology for Supermicro’s AI-based products. Given these issues, the company risks losing market trust, which could benefit competitors such as Dell and Hewlett-Packard if customers switch for greater stability.
