TLDR:
- Super Micro Computer (SMCI) delayed filing its Q1 2024 financial report
- Ernst & Young resigned as auditor in October, citing inability to rely on management representations
- Stock has lost over 57% in value over the last month
- Company faces potential Nasdaq delisting due to delayed filings
- Preliminary Q1 revenue expected between $5.9-6B, below $6-7B guidance
Super Micro Computer’s stock continued its downward spiral on Wednesday, dropping 6.31% to $20.33 after announcing another delay in filing required financial reports, raising concerns about potential delisting from the Nasdaq exchange.
The server manufacturer informed investors it would miss the deadline for its fiscal first-quarter 10-Q report filing. This delay follows the company’s earlier inability to file its 2024 annual report, putting it at risk of non-compliance with Nasdaq listing requirements.
The troubles began when Ernst & Young, the company’s auditor, resigned in October. The accounting firm stated they could no longer rely on representations from Super Micro’s management and Audit Committee, leaving the company without an auditor to verify its financial statements.
The stock’s technical indicators show continued weakness. Trading volume has surged above average as shares broke below a descending broadening wedge pattern in late October. The relative strength index (RSI) has moved below 30, indicating oversold conditions but also confirming bearish momentum.
Super Micro’s shares have experienced a dramatic decline, losing more than half their value since late October. The stock is now down approximately 28% year-to-date, with after-hours trading pushing the price even lower to around $19.
The company recently released unaudited preliminary results for the first quarter ending September 30, projecting revenue between $5.9 billion and $6 billion. These figures fell short of previous guidance, which had estimated revenue between $6 billion and $7 billion.
Key support levels have emerged at $17, where previous trading patterns suggest possible price stabilization. If this level fails to hold, the next support zone appears around $12, marked by three peaks formed between March and April of the previous year.
Resistance levels are notable at $23, where a trendline connects multiple low points from June to October of last year. A stronger resistance zone exists around $30, corresponding to the broadening formation’s lower trendline and the top of a prior trading range.
The stock’s decline accelerated following a bearish report from short seller Hindenburg Research in August, which alleged repeated accounting violations at the company. The subsequent resignation of Ernst & Young added credibility to these concerns in investors’ minds.
Without an announced agreement with a new auditor, Super Micro faces mounting pressure to resolve its filing obligations. The company stated it cannot file its quarterly report “without unreasonable effort or expense,” suggesting ongoing internal challenges.
If Super Micro fails to meet SEC filing requirements, it risks being delisted from the Nasdaq exchange. While the stock could continue trading on over-the-counter exchanges following a delisting, such an event would likely trigger additional selling pressure.
The stock currently shows a market capitalization of $12 billion, with a 52-week trading range of $20.20 to $122.90. Daily trading volume has increased substantially, reaching 446,363 shares compared to an average of 75,026,046.
Super Micro’s share price closed at $20.33 on Wednesday, near the bottom of its daily trading range of $20.27 to $21.80. The company reports a gross margin of 14.33% and does not pay a dividend.
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