Super Micro Computer (SMCI) shares continued their recovery on Friday, posting a weekly gain of more than 78%.
Shares of Super Micro — the AI server maker that uses Nvidia’s ( NVDA ) chips and has a big deal with Elon Musk’s xAI — rose 11.6% to about $33 in Friday trading. Even with those gains, shares are still well below peaks above $120 in March following the addition of SMCI to the S&P 500.
The stock’s rally began Monday ahead of Super Micro’s filing of a compliance plan with the Nasdaq (^IXIC) as it looks to avoid delisting. Shares soared when the company officially announced it had submitted the plan and hired a new accountant, BDO. Super Micro’s former accountant, Ernst & Young, resigned at the end of October.
Super Micro is grappling with the fallout from an August report from short-selling firm Hindenburg Research that highlighted alleged accounting malpractice, export control violations and murky relationships between top executives and Super Micro partners. Following the Hindenburg report, Super Micro delayed the filing of its annual 10-K and most recent quarterly 10-Q reports with the Securities and Exchange Commission, putting the company at risk of delisting from the Nasdaq. Super Micro is also reportedly under investigation by the Department of Justice.
The flood of bad news has sent stocks plummeting in recent months. In particular, EY’s resignation caused Super Micro shares to fall by more than 30% in one day at the end of October. The accountant writes in his resignation letter that he is ‘not prepared to be associated with the annual accounts he has drawn up’ [Super Micro] management.”
Adding to the woes, Super Micro’s fiscal first-quarter earnings report on Nov. 5 missed Wall Street expectations. As Wedbush analyst Matthew Bryson wrote in a note to investors at the time, the company blamed the lower sales on delays with Nvidia’s Blackwell AI chips and issues with its SEC filings. Bryson maintains a neutral rating on the stock and recently lowered his price target on shares from $32 to $24.
Other companies such as Barclays (BCS), Wells Fargo (WFC) and KeyBanc have suspended coverage of the stock.
Super Micro said Monday that it is on track to make delayed filings with the SEC “and become current with its periodic reports within such discretionary period as the Nasdaq staff may grant.”
Wedbush’s Bryson wrote in a separate note on November 19 in response to Monday’s news: “We see the retention of a new accountant as an important positive step for SMCI as it addresses perhaps the most substantial concern regarding the ability of SMCI to remain publicly traded… path for SMCI to file its financials and restore compliance with NASDAQ.”
He added that “even if the best-case scenario occurs, we believe that EY’s resignation will necessarily still raise some lingering concerns about the health of SMCI’s financial institutions,” given concerns about the reported DOJ investigation and the questionable relationships between Super Micro’s top executives and its customers. and suppliers, and the new accountant BDO’s own regulatory issues.
Super Micro shares were also helped this week by Nvidia’s huge earnings report and the company’s assurances that production at Blackwell is on pace. Nvidia CEO Jensen Huang gave Super Micro a shoutout during the AI chipmaker’s earnings call, calling SMCI one of its “great partners.”
Friday’s stock move means SMCI short sellers are now down $1.4 billion in mark-to-market losses since shares hit a low of $18.01 on Nov. 14, according to data from S3 Partners.
“SMCI is turning into a squeeze stock, with short sellers’ buy-to-covers going hand in hand with long buyers pushing SMCI’s share price higher,” Ihor Dusaniwsky, managing director of S3 Partners, told Yahoo Finance.
Laura Bratton is a reporter for Yahoo Finance. Follow her on X @LauraBratton5.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
