Super Micro Computer Inc. (SMCI) has been grappling with significant challenges that have put its continued listing on the Nasdaq exchange at risk. The deadline for Super Micro to file either its delayed 10-K annual report or a compliance plan with Nasdaq (COMP) is fast approaching, now set for Monday, November 18, due to a weekend and holiday extension from the original deadline of November 16.
The company’s troubles began in August when it announced the delay of its annual filing, a decision influenced by a scathing report from Hindenburg Research accusing the firm of accounting red flags and dubious business practices. This was compounded by the resignation of its auditor, Ernst & Young LLP, in October, who cited governance and transparency issues as reasons for their departure. Additionally, Super Micro is under scrutiny by the US Department of Justice.
This week, further delays were announced as Super Micro postponed its quarterly 10-Q filing for the period ending September 30. Despite this, the company has indicated that its internal review, prompted by EY’s concerns, is nearing completion. Analyst Matt Bryson from Wedbush speculated – as per Bloomberg – that these findings might influence the company’s strategy to hire a new auditor and submit financial reports.
The market reaction has been harsh, with Super Micro shares plummeting by more than 70% in the last 3 months, and over 85% from their peak in March, erasing more than $55 billion in market value.
Should Nasdaq approve Super Micro’s compliance plan, the company would likely receive an extension into February to file its reports. However, if the plan isn’t approved, Super Micro could appeal, but failure to resolve these issues might lead to delisting. Delisting would not only affect the stock’s liquidity but also trigger its removal from the S&P 500 Index, into which it was inducted earlier this year, and could necessitate an early repayment on $1.725 billion of its bonds.
Super Micro has a history of facing Nasdaq delisting; it was previously removed in 2019 for similar reasons but managed to return in 2020 after settling an SEC investigation for $17.5 million without admitting or denying the allegations.
Despite these challenges, Super Micro’s earlier success in 2024, driven by the AI industry surge and its addition to the S&P 500 (SPX), seemed to set it on a path of growth. However, the recent business update in early November was less optimistic, forecasting revenues between $5.5 billion and $6.1 billion, falling short of Wall Street’s expectations of nearly $6.8 billion.
As the clock ticks down to the deadline, the tech world watches to see if Super Micro — Nvidia’s (NVDA) third-largest customer and a significant user of its vendor financing — can navigate through this financial and regulatory storm, a situation that has already left investors reeling and the company’s future on the Nasdaq hanging in the balance.
Price Action: As of press time, SMCI is trading at $17.64, down roughly 2% intraday. The stock has declined 72% over the past three months and is down 39% year-over-year.
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