Super microcomputer (NASDAQ: SMCI) Stock prices have been in freefall for the past six months. A host of issues related to accounting practices have spooked investors. After the company announced it would have to delay the release of its 10-K annual report for the 2024 fiscal year ending June 30, it also faced the possibility of its shares being delisted from the Nasdaq Stock Exchange.
It has now reached the deadline for a delisting from the Nasdaq stock exchange, but today it plans a filing that could result in the company being delisted, Barron’s reports. That led to a 17.5% spike in stock prices as of 12:30 PM ET today. Although shares are still down about 75% over the past six months.
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If the company indeed manages to avoid being delisted from the major stock exchange, that will certainly be good news for shareholders. So it makes sense that investors sent the shares soaring today. But that’s not the end of the company’s problems.
The 10,000 filing delay followed a short-seller’s report questioning Supermicro’s accounting practices. The company’s accountant has since resigned and said the company will also be forced to delay its first-quarter 2025 report while it searches for a new accounting firm.
Supermicro management issued an update on November 5 saying preliminary results for the September quarter would be below expectations. But it also added that a three-month investigation by independent counsel found “no evidence of fraud or misconduct on the part of management or the board of directors.”
But investors should also worry about the business implications. Supermicro could lose orders as it struggles to right its ship. And today’s bounce is likely the result of a short squeeze, as short sellers cover positions and take profits. According to MarketWatch, short sellers held about 19% of the shares at the end of October.
Those interested in owning the stock should probably wait for better official news. Today’s rebound isn’t a sign that the company itself is back in growth mode.
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