Super Micro Computer Shares Plummet

(Reuters) – Shares of Super Micro Computer (NASDAQ:SMCI) tumbled more than 24% to hit a near 18-month low on Wednesday amid concerns over an unclear timeline for its annual report and weak quarterly forecasts, raising investor worries for the AI-server maker.

The company's auditor, Ernst & Young, unexpectedly stepped down last week after highlighting concerns over financial reporting. On Tuesday, Super Micro stated that an investigation by a special committee of its board found no evidence of fraud or misconduct.

According to J.P. Morgan analysts, “The actions of the prior auditor and the Special Committee are at odds with each other, further increasing confusion around current developments rather than enhancing transparency.”

In late August, Super Micro delayed its annual report filing, citing the need to assess internal controls over financial reporting. This came a day after short-seller Hindenburg Research announced it had taken a short position in the stock, alleging “accounting manipulation.”

Super Micro risks being delisted from Nasdaq if it misses deadlines later this month. If current losses continue, the company is expected to lose over $4 billion in market value.

Additionally, the company forecasted second-quarter sales and profit below Wall Street expectations on Tuesday, awaiting the latest chips from Nvidia (NASDAQ:NVDA).

Super Micro's shares have been volatile since peaking in March amidst a boom in generative AI technology, which has increased demand for AI-powered servers and hardware needed for large data processing. The stock is down approximately 2% this year, having risen more than 240% last year.

Super Micro trades at a forward price-to-earnings ratio of 7.56, compared to 14.70 for Dell Technologies (NYSE:DELL) and 9.51 for Hewlett Packard Enterprise (NYSE:HPE).