It’s been a roller coaster ride for Supermicrocomputers (NASDAQ:SMCI) stocks this year, with many big moves in both directions. After a hot start to the year, the company’s shares began to fall following a brief report from Hindenburg Research accusing the company of accounting manipulation. That was quickly followed by the company delaying the filing of its 10-K annual report.
The Wall Street Journal later reported that Supermicro was under investigation by the Department of Justice (DOJ) for possible accounting issues, adding fuel to the fire, although the report was never confirmed by the company nor the DOJ.
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Shares later shot higher after the company announced it was shipping more than 100,000 graphics processing units (GPUs) per quarter.
However, that rally faded when news arrived that the accountant, Ernst and Young, was resigning and the company would have to find a new accountant to file its annual report. This delay put the company at risk of having its shares delisted from the stock exchange Nasdaq stock market.
Supermicro shares took another hit after the company reported preliminary fourth-quarter earnings that fell well short of expectations. However, the stock returned to rally mode after the company announced it had found a new accountant.
On a year-to-date basis, the stock is currently down modestly, around 7% at the time of writing, although it tends to make some pretty big moves in a short period of time. Against that backdrop, let’s take a closer look at the company’s latest news and whether investors should consider buying the stock at current levels.
Supermicro’s shares rose more than 30% after it appointed BDO as its new auditor. Ernst and Young had previously resigned and made a pretty harsh statement, saying they were “unwilling to be associated with the financial statements prepared by management” and that they had concerns about governance, transparency and Supermicro’s internal controls.
The company had only been Supermicro’s accountant since March 2023, following the acquisition of Deloitte & Touche.
So acquiring BDO, one of the five largest accounting firms in the world, is a big potential win for the company. In a statement, Supermicro said: “This is an important next step in bringing our financial statements current, an effort we are pursuing with both dedication and urgency.”
In addition to announcing a new auditor, Supermicro also said it has filed a compliance plan with Nasdaq in hopes of obtaining a filing extension and remaining listed on the exchange. If the company were to be taken private, the shares would still trade, but now the shares would be on the over-the-counter (OTC) market. That could lead to its removal for the S&P500 index, which was only joined earlier this year.
