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SMCI stock has plunged amid concerns about the accuracy of its financials raised by its auditor.
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The company faces a Nasdaq delisting deadline due to unfiled financial statements.
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“It arguably appears to be an uphill battle for SMCI to remain listed at this point,” an analyst said.
Super Micro Computer, a darling of the artificial intelligence trade, has seen its stock tumble sharply after a 1,600% rally, and now faces delisting following the resignation of its auditor last week.
Shares of the company have crashed 79% from their peak, plummeting further last week after accounting firm EY said it would resign as the company’s auditor.
“We are resigning due to information that has recently come to our attention which has led us to no longer be able to rely on management’s and the Audit Committee’s representations and to be unwilling to be associated with the financial statements prepared by management,” the accounting firm said in a filing.
Super Micro Computer failed to file financial statements with the Securities and Exchange Commission that were originally due in August. Per Nasdaq rules, the company has until November 20 to submit a plan to the exchange for it to get back into compliance. If approved, it could push the deadline to early next year.
Shares of Super Micro Computer dropped 2% on Tuesday, extending its weeklong decline to 48%. The stock was trading at about $26.20 around noon ET.
With such a negative overhang for the stock, Wedbush analyst Matt Bryson said investors probably won’t care about its quarterly results until key questions are answered.
“We believe questions around EY’s decision, SMCI’s ability to file its 10K, and a reported DOJ investigation will take precedence over SMCI’s quarterly report and guide,” Bryson said in a note on Monday.
“It arguably appears to be an uphill battle for SMCI to remain listed at this point,” he added, noting EY’s desire to distance itself from financial statements prepared by the company’s management.
This isn’t the first time Super Micro Computer investors faced delisting concerns.
In August 2018, the company announced a suspension of trading in its stock after it was delisted from the Nasdaq for failing to file its financial reports in a timely manner.
Bryson said that another question for Super Micro Computer is whether its financial accounting woes could impact its underlying business of selling server racks filled with Nvidia’s most powerful AI-enabled GPU chips.
“We have had mixed feedback regarding whether concerns around SMCI late filing and/or the reported DOJ investigation might be impacting customer’s decisions,” Bryson said.
