The mad dash to adopt artificial intelligence (AI) has put a number of companies in the spotlight Super microcomputer (NASDAQ: SMCI)commonly referred to as Supermicro, has perhaps been one of the biggest beneficiaries. The company is the leading provider of servers specifically designed to withstand the rigors of AI, making Supermicro play a crucial role in the AI revolution.
However, the spotlight can be a cruel mistress, which Supermicro recently experienced firsthand. The company became a victim of its own success and caused a number of self-inflicted wounds, sending its stock plummeting as much as 84% from its all-time high reached earlier this year.
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Supermicro announced that it had developed a plan to avoid delisting and had hired a new accountant. The news sent the stock up more than 30% on Tuesday morning (at the time of writing).
Let’s take a look at the events leading up to today, the company’s big announcement and what it means for investors.
Supermicro soared earlier this year, riding the wave of AI adoption that drove a surge in demand for its AI-centric servers, sending the stock up more than 1,000% since the AI revolution took off in early 2023 went. But the celebration was short-lived. -lived, and the stocks crashed. For those who haven’t been following, here’s a quick summary of the issues plaguing the beleaguered company:
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Hindenburg issued a brief report alleging, among other things, that Supermicro’s financials contained accounting irregularities, that the company had failed to disclose related-party transactions and that it had violated U.S. export bans.
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The next day, Supermicro added fuel to the fire by announcing that it would be late in filing its annual 10-K report with the Securities and Exchange Commission (SEC), saying it needed additional time to review its internal controls – or the processes it operates. used to ensure compliance with accounting rules and regulations.
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Just weeks later, reports emerged that the US Department of Justice (DOJ) was investigating the company The Wall Street Journal. The investigation appeared to stem from a whistleblower report alleging accounting violations.
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Supermicro revealed that it had received a letter of non-compliance from the Nasdaq exchange, which could ultimately lead to delisting.
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Supermicro announced that its accountant, Ernst & Young – one of the most respected accounting firms in the world – had resigned in the middle of the company’s audit. The auditors cited issues related to Supermicro’s internal controls over financial reporting.
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In another filing with the regulator, Supermicro admitted it would not be able to file its latest quarterly report on time, again raising the specter of delisting.
