Super Micro Computer Shares Plummet 22.7% In An Otherwise Green Pre-Market: What's Going On?

Benzinga Neuro

November 06, 2024

Shares of Super Micro Computer Inc (NASDAQ:SMCI) experienced a significant drop of 22.74% in pre-market trading on Wednesday as per Benzinga Pro. This decline comes after the company reported revenue that fell short of expectations and issued weaker-than-expected guidance. Furthermore, Super Micro has announced uncertainty regarding the filing of its annual results for the latest fiscal year.

What Happened: The company’s shares had already been under pressure last week following the resignation of its auditor, Ernst & Young, amid allegations of accounting irregularities and claims of shipping sensitive chips to sanctioned entities, potentially violating export controls. During a call with analysts on Tuesday, Super Micro did not address questions regarding Ernst & Young’s resignation or corporate governance issues. CEO Charles Liang mentioned that the company is actively seeking a new auditor.

Super Micro faces a potential delisting from the Nasdaq if it does not submit its annual report to the SEC by mid-November. The company has not released audited results since May. Liang stressed the importance of updating their financial reporting. For the quarter ending Sep. 30, Super Micro reported net sales between $5.9 billion and $6 billion, which fell short of the $6.45 billion analyst expectations but represented an 181% annual increase.

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Despite these challenges, Super Micro’s business has been thriving, driven by demand for servers equipped with Nvidia processors for AI applications. However, the company’s forecast for the December quarter also fell below estimates, projecting revenue between $5.5 billion and $6.1 billion, compared to the $6.86 billion average analyst estimate. Adjusted earnings per share are expected to be between 56 cents and 65 cents, below the anticipated 83 cents.

Why It Matters: The recent resignation of Ernst & Young as Super Micro’s auditor has put the company under intense scrutiny. The auditor, appointed in March 2023, resigned before completing its report on the company’s financials or internal controls. This resignation has raised significant concerns about governance and transparency at Super Micro, contributing to the stock’s volatility. The company’s inability to address these issues could have long-term implications for its market position and investor confidence.

Meanwhile, U.S. stocks could witness a strong opening on Wednesday after former President Donald Trump emerged victorious after a long-drawn battle with Joe Biden and Kamala Harris. In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) gained 2.33% to $590.23 and the Invesco QQQ ETF (NASDAQ:QQQ) rose 1.82% to $501.15, according to Benzinga Pro data.

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Image via Shutterstock

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari

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