Shares of Super microcomputer (NASDAQ:SMCI) rose yesterday after the company announced it had filed a plan to remain listed on the US stock exchange Nasdaq stock exchange and, perhaps most importantly, hired a new independent auditor.
The stock rose about 31% on that news, having been in freefall in recent weeks. But Supermicro shares gave back some of yesterday’s gains in the current session. As of 3:17 PM ET, shares were down 10.1% today.
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Appointing a new accountant was critical, and maintaining the Nasdaq listing is also important for the company and its shares. But Supermicro’s accounting questions will still have consequences.
In a business update presented on November 5, the company lowered revenue expectations for the first quarter of 2025 ended September 30. It also gave lower revenue expectations for the second fiscal quarter than investors had hoped. But the company also shared that an independent committee investigating the previous auditor’s concerns resulted in no findings of fraud or misconduct.
That is positive news, but it does not remove the uncertainty in business operations. And it wouldn’t be a stretch to think that Supermicro’s average quarterly revenues of $5.95 billion and $5.8 billion, respectively, could be cut again in the future. After all, customers may not want to take the risk of placing certain orders in this dynamic situation.
That said, the stock now trades with a market cap of around $15 billion. Even if the stated guidelines were reduced by a third and extrapolated over a full twelve-month period, annual revenues would total more than $15 billion. That would result in a price-to-sales ratio of around 1, and that could be an interesting place to start an investment.
But investors willing to take the risk should go in with their eyes wide open. It’s possible that Supermicro’s rejuvenation could be short-lived and the company could still fall apart. The company’s results have yet to be confirmed, and some investors were happy to book yesterday’s gains.
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