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SMCI shares have fallen due to concerns about the accuracy of the financial data raised by the auditor.
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The company is facing a delisting deadline from Nasdaq over unfiled financial statements.
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“It looks like it will be an uphill battle for SMCI to remain listed at this point,” said an analyst.
Super Micro Computer, a darling of the artificial intelligence trade, has seen its shares plummet sharply after a 1,600% rally, and now faces delisting following the resignation of its accountant last week.
The company’s shares are down 79% from their peak, falling further last week after accounting firm EY announced it would step down as the company’s auditor.
“We are resigning due to information that has recently come to our attention which has resulted in us no longer being able to rely on the statements of management and the Audit Committee and our unwillingness to be associated with the financial statements prepared by the management have been established,” the accounting said. firm said in a submit.
Super Micro Computer failed to file financial statements with the Securities and Exchange Commission that were originally due in August. Under Nasdaq rules, the company has until November 20 to submit a plan to the exchange to return to compliance. If approved, the deadline could be pushed back to early next year.
Shares of Super Micro Computer fell 2% on Tuesday, extending the week’s decline to 48%. The stock was trading at around $26.20 around noon ET.
With such a negative overhang on the stock, Wedbush analyst Matt Bryson said investors are unlikely to care about the quarterly results until the key questions are answered.
“We believe questions surrounding EY’s decision, SMCI’s ability to file its 10K and a reported DOJ investigation will take precedence over SMCI’s quarterly report and guide,” Bryson said in a note Monday.
“It appears that it will be an uphill battle for SMCI to remain publicly traded at this time,” he added, noting EY’s desire to distance itself from the financial statements prepared by the company’s management company.
This is not the first time that investors in Super Micro Computer have faced concerns about delisting.
In August 2018, the company announced a suspension of trading in its shares after it was delisted from the Nasdaq for failing to file its financial reports on time.
Bryson said another question for Super Micro Computer is whether the financial accounting issues could impact its underlying business of selling server racks filled with Nvidia’s most powerful AI-enabled GPU chips.
“We have received mixed feedback on whether concerns about SMCI’s late filing and/or the reported DOJ investigation could impact customer decisions,” Bryson said.
Wedbush rates Super Micro Computer at “Neutral” with a $32 price target.
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