Shares of Super Micro Computer (SMCI) plummeted more than 20% in premarket trading on Wednesday following an uncertain timeline for the company’s annual report and weaker-than-expected quarterly forecasts, which have fueled investor anxiety about the AI-server maker’s future prospects.
The drop comes after the unexpected resignation of Super Micro’s auditor, Ernst & Young (EY), last week. The audit firm cited concerns over the company’s financial reporting, sparking doubts among investors. However, Super Micro announced on Tuesday that an independent review conducted by a special committee of its board found no evidence of fraud or misconduct. Despite this, analysts, including those from J.P. Morgan, noted that the contradictory actions of the previous auditor and the special committee only added to the confusion surrounding the company’s financial transparency.
The uncertainty surrounding the company intensified in late August when Super Micro announced a delay in filing its annual report, citing the need to reassess its internal controls over financial reporting. This came shortly after short-seller Hindenburg Research claimed the company was involved in “accounting manipulation,” leading to further scrutiny.
Super Micro now faces the risk of being delisted from the Nasdaq if it does not meet critical filing deadlines later this month.
In addition to the auditing issues, the company also provided weak guidance for its upcoming quarter. Super Micro forecast second-quarter revenue and profit below Wall Street’s expectations, largely due to delays in receiving key chips from Nvidia, a key partner in the AI industry.
The company’s stock has been volatile since its peak earlier this year, which was fueled by the surge in demand for AI-powered servers. While Super Micro’s shares surged more than 240% in 2023, they are down about 2% year-to-date.
Despite the challenges, Super Micro remains an important player in the AI infrastructure space, particularly as a key supplier to Nvidia, a leading AI chipmaker. However, concerns about its financial governance and future growth prospects have raised alarms among investors.
Super Micro’s stock has been on a roller-coaster ride, peaking in March 2023 amid AI hype, only to see significant declines since then, including a nearly one-third drop last week after the resignation of EY.
In a filing on Tuesday, the company said it was still uncertain when it would be able to submit its long-delayed 10-K annual report to regulators, which was due in late August. CEO Charles Liang reassured investors on an earnings call, stating that the company is “actively engaging a new auditor” and working with urgency to resolve its financial reporting issues.
The company also announced preliminary quarterly results that were below expectations, with projected revenue for the September quarter between $5.9 billion and $6 billion—lower than previous guidance and below analyst estimates of $6.5 billion. For the upcoming quarter, Super Micro expects revenue between $5.5 billion and $6.1 billion, again falling short of Wall Street’s forecast of $6.8 billion.
Reuters and Financial Times contributed to this report.
