Super microcomputer (NASDAQ:SMCI) Shares lost ground over the last week of trading. According to data from S&P Global Market Intelligence, the server company’s stock price ended the period down 17% from last week’s market close.
Supermicro shares fell this week after bearish reporting from analysts JPMorgan. Despite assurances that the stock is on track to avoid a delisting, investors also continued to weigh the risk that the company’s shares could be delisted. Nasdaq stock exchange.
JPMorgan published new coverage of Supermicro on December 10 and maintained an underweight rating on the stock. The company maintained a one-year price target of $23 per share. Even after a major sell-off this week, JPMorgan’s price target implies an additional downside of about 37%.
JPMorgan published its coverage after participating in a meeting with Supermicro management. The server specialist said it saw no significant loss of orders despite recent reports to the contrary, and management also said it was still on track to ramp up production at its Malaysia factory in the second half of fiscal 2025 feed.
But despite Supermicro’s strong position in custom artificial intelligence (AI) servers and management’s reassurances, JPMorgan remained bearish on the stock. Although the tech company said it is on track to file the financial filings needed to return to compliance with the Securities and Exchange Commission (SEC) and Nasdaq by February 25, some investors are still concerned about its prospects share. If Supermicro fails to meet the new filing deadlines or has to significantly restate previously reported results, its stock price could crash again.
After the market closed Friday, Bloomberg reported that Supermicro had hired Evercore to help the company raise money. The news could put more downward pressure on the stock in the short term.
According to Bloomberg, the technology specialist wants to raise working capital by selling new shares and taking on debt. Supermicro is reportedly approaching private equity firms to see if they are interested in investing in the company. Potential fundraising efforts are said to be still in the early stages, and it is possible that the company will not make any progress with such a move.
On the other hand, selling more shares would have a dilutive effect on existing shareholders. Offering new shares and taking on debt also raises questions about the company’s profitability and working capital. The company recently said it believed it has sufficient working capital to operate at a scale that would generate between $5.5 billion and $6 billion. If Supermicro announces a substantial new stock offering, its already volatile shares could plummet.
