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Super Micro Computer (SMCI) finds itself at a critical juncture as it approaches a crucial deadline. The company must file its 10-K and 10-Q forms by Feb. 25 to maintain compliance with Nasdaq’s listing requirements. Failure to do so could result in a delisting from the Nasdaq Exchange, an outcome that would have far-reaching implications for the stock’s liquidity and attractiveness to institutional investors.
In this article, we delve deep into what’s at stake for Super Micro Computer as the deadline approaches. Whether you’re a long-time shareholder or considering an entry point, understanding the risks and opportunities surrounding this deadline is critical. With that, let’s dive in.
About Super Micro Computer Stock
Valued at a market capitalization of $18.4 billion, Super Micro Computer (SMCI) is a California-based company that specializes in the development and manufacturing of high-performance server and storage solutions based on modular and open architecture. Its solutions include complete server and storage systems, modular blade servers, workstations, networking devices, server sub-systems, and accompanying management and security software.
Shares of the artificial intelligence server maker have gained 9% year-to-date. SMCI stock experienced a volatile start to the year, initially kicking off on a high note before losing all its gains amid a global tech sector selloff, sparked by Chinese startup DeepSeek. However, the stock managed to recover some ground in February.
SMCI Fans, Mark Your Calendars for February 25
A pivotal date is approaching for Super Micro. In early December, SMCI was granted an extension under Nasdaq rule 5250(c)(1), giving the company until Feb. 25 to file its annual report for the fiscal year 2024 and its 10-Q quarterly report for the period ending Sept. 30, 2024. If the company fails to meet this deadline or does not secure another extension, it could once again be at risk of delisting.
It is important to note that this isn’t the first time Super Micro has faced a significant listing challenge. In 2018, SMCI experienced a similar situation with delayed filings, which led to its delisting from the Nasdaq. The company spent over a year getting its regulatory paperwork up to date before it could relist on the Nasdaq in 2020. With this precedent in mind, investors are understandably anxious about the possibility of history repeating itself.
A significant move toward rebuilding investor confidence is SMCI’s appointment of BDO USA as its new independent auditor. BDO is a well-respected auditing firm. Also, SMCI’s board formed an independent special committee, which found no evidence of misconduct by management or the Board of Directors. This can be viewed as a positive development, as it may help BDO with accountability, potentially accelerating the process of submitting the delayed filings. In addition, management recently expressed confidence that the company will “file all the required reports by Feb. 25, 2025.” Despite early positive signs, investors are likely still questioning whether Super Micro can meet the filing deadline.
Meanwhile, Super Micro announced late Monday that it will provide an fiscal second-quarter business update on Feb. 11. While no further details were announced, the stock climbed over 8% in the subsequent trading session. This clearly demonstrates how any positive development can impact its stock price. With that, if SMCI submits its delayed financials by the February deadline, it is likely to trigger a relief rally, which could be amplified by a short squeeze. This could drive the stock to its critical resistance zone near the round-number price level of $40. Conversely, if the company fails to meet the final deadline, the stock is likely to drop to its November low of around $20 or potentially fall even lower. That said, I believe it would be wise to adopt a wait-and-see approach at this time.
Recent News for SMCI Stock
On Feb. 5, SMCI stock surged about 8% after the company announced full production availability of its end-to-end AI data center Building Block Solutions accelerated by the Nvidia Blackwell platform. The Supermicro Building Block portfolio features a wide array of air-cooled and liquid-cooled infrastructure systems with various CPU options to scale Nvidia (NVDA) Blackwell solutions. Additionally, a comprehensive data center management software suite, rack-level integration, including complete network switching and cabling, and cluster-level L12 solution validation are available as a turn-key offering.
“In this transformative moment of AI, where scaling laws are pushing the limits of data center capabilities, our latest NVIDIA Blackwell-powered solutions, developed through close collaboration with NVIDIA, deliver outstanding computational power,” said Charles Liang, president and CEO of Super Micro.
How Did SMCI Perform in FQ1?
Super Micro announced its preliminary fiscal first-quarter results on Nov. 5. You can explore a detailed analysis of the company’s preliminary results in my previous article about SMCI. Here, let’s focus on the key points. SMCI’s quarterly revenue stood at approximately $6 billion, up over 180% year-over-year, primarily driven by the growing adoption of AI technologies and the deployment of Direct Liquid-Cooled (DLC) AI superclusters. The expected adjusted EPS of approximately $0.75 is nearly double that of the year-ago quarter. The blend of significant revenue growth and robust EPS expansion highlights the company’s ability to capitalize on the growing AI server market.
Management expects second-quarter net sales to be between $5.5 billion and $6.1 billion, while adjusted EPS is projected to range from $0.56 to $0.65. At the same time, gross margins are expected to decline slightly “due to a shift in customer and product mix.” Notably, management stated that 15%-30% of new data centers are expected to use liquid-cooled infrastructure within the next 12 months, suggesting potential for the company to expand its share of the DLC market. With that, SMCI is well-positioned to capitalize on strong AI market demand, particularly if it resolves its regulatory issues.
SMCI Valuation and Analysts’ Estimates
According to Wall Street estimates, SMCI is expected to post a 25.76% year-over-year adjusted EPS growth to $2.78 in FY25. Its revenue is projected to grow 63.91% from the previous year to $24.49 billion.
In terms of valuation, the company’s adjusted forward P/E and EV/EBITDA ratios stand at 10.50x and 7.29x, well below the sector median of 25.43x and 16.07x, respectively. While such a discount is quite rare for companies exposed to AI, it should be noted that in the case of SMCI, it reflects delisting risks that continue to affect investor confidence.
Options Market Sentiment on SMCI Stock
Examining the option chain for Feb. 28, 2025 (just after the deadline), the $31.00 CALL option shows a bid/ask spread of $4.95/$5.05, and the $31.00 PUT option has a spread of $4.30/$4.40. Keep in mind that this option strike is closest to the current stock price. We can now define the expected price movement by using the midpoint prices of these options:
4.35 (31.00 put) + 5.00 (31.00 call) = 9.35/31.49 = 29.7%
Based on current prices and employing the long straddle strategy, the options market suggests that SMCI stock could experience a movement of about 30% by the Feb. 28 options expiration from the $31.00 strike price. That would place the stock in a trading range of about $22 to $41.
Notably, at the $31.00 strike price, open call options outnumber open put options by about 3.5 to 1, with 959 open calls versus 272 open puts. This indicates a bullish outlook in the options market, implying that traders are confident the company will submit its delayed filings on time, potentially leading to a significant stock rally.
What Do Analysts Expect for SMCI Stock?
Most Wall Street analysts advise against rushing into SMCI stock, assigning it a consensus “Hold” rating. However, a few analysts take a contrarian stance on Super Micro. For instance, Loop Capital recently boosted its price target on SMCI stock and maintained a bullish rating.
Among the 13 analysts covering the stock, two recommend a “Strong Buy,” one assigns a “Moderate Buy” rating, eight suggest a “Hold,” and the remaining two give a “Strong Sell” rating. The average price target for SMCI stock is $49.56, which suggests a huge upside potential of 57.4% from current levels.
