One of the most volatile stocks in recent months was Super microcomputer (NASDAQ: SMCI). The company provides solutions for the enormous computing power of data centers required in the field of artificial intelligence (AI).
After surging more than 300% early this year, Super Micro faced criticism over its accounting practices, sending its stock plummeting. But this week, interest rates have rebounded strongly as some accounting questions are answered. According to year-to-date data, shares of Super Micro are up 27.5% since late Thursday S&P global market information.
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Its stock price rose this week after the company released a long-awaited report from an independent committee charged with investigating accounting questions raised by both a short-seller and his former accountant.
Ernst & Young (EY) resigned as Super Micro’s auditor at the end of October, scathingly saying the company was “unwilling to be associated with the financial statements prepared by management.” That caused the shares to crash as EY was investigating concerns it had about management’s governance, transparency and internal financial controls.
Several weeks later, Super Micro said it had hired a new accounting firm, and the committee tasked with investigating EY’s concerns issued initial findings that indicated some legitimate concerns but no fraud on the part of management.
That committee completed its investigation this week and provided investors with details of what it found, including recommendations for the future. These findings confirmed that there were no reasons to restate previously reported financials, and the stock took off.
While that seems like good news, especially as revenue continues to grow rapidly, it doesn’t mean all is well at Super Micro. The company still needs to officially file the deferred annual report for the period of fiscal year 2024 ending June 30, as well as the report for the first quarter of fiscal year 2025.
However, Super Micro’s new accounting firm still needs to sign off on these financials, which is what investors will need to really regain confidence in the company.
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