Super Micro Computer (SMCI) shares continued their recovery Friday, with shares on track to post a weekly gain of more than 70%.
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 more than 8% to around $32 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 that 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.”
