Super Micro Computer Inc. (NASDAQ:SMCI) is gearing up for its first-quarter earnings report after market close on Tuesday. According to data from Benzinga Pro, expectations are for earnings per share (EPS) of 75 cents and revenue of $6.45 billion.
Super Micro’s financial credibility, after significant governance issues, has investors concerned.
Here’s what to watch as the company tries to stabilize in the wake of these challenges.
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SMCI stock has taken a beating over the past year, down 3.05% year-on-year and 8.83% year-to-date.
Ernst & Young’s recent departure as auditor due to concerns about transparency and governance has hit the shares even harder. Although management has created a special committee to address the issues, SMCI now faces a Nov. 20 deadline to regain Nasdaq compliance or risk delisting.
The pressure is on for Super Micro to convince investors to address these issues head-on.
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From a technical perspective, SMCI is deep in bear territory.
Chart created with Benzinga Pro
The stock is currently trading at $26.34, well below its 200-day moving average of $71.97, and shows no signs of recovery. With a relative strength index (RSI) of 23.71, SMCI is in oversold territory, suggesting the stock could fall further unless fundamentals improve.
Meanwhile, the moving average convergence-divergence indicator (MACD) is at negative 4.69, reinforcing the negative outlook.
Super Micro’s problems extend beyond the stock chart. Nvidia Corp (NASDAQ:NVDA) has reportedly redirected some orders to Asia-based suppliers Gigabyte and ASRock, indicating that Super Micro Computer’s internal issues are affecting business relationships.
As demand for AI infrastructure remains robust, competition is fierce and SMCI risks missing out on crucial revenue streams if it cannot maintain the trust of its partners.
With Super Micro Computer’s first-quarter results just around the corner, analysts are wary. Rosenblatt analyst Hans Mosesmann suspended his rating due to a lack of financial clarity, while Wedbush’s Matt Bryson cut his price target from $62 to $32.
