One day after a prominent short seller blasted the company for alleged accounting irregularities, Super Micro Computer announced that it is delaying the filing of its annual report on form 10-K with the U.S. Securities and Exchange Commission. SMCI stock plunged on the news.
The data center specialist said it needs more time "to complete its assessment of the design and operating effectiveness of its internal controls over financial reporting" for the fiscal year ended June 30.
In a news release, Super Micro said it plans to file a Notification of Late Filing on Form 12b-25 with respect to the annual report on Friday.
Super Micro did not say how long it will need to complete its 10-K report and filing.
SMCI Stock Crashes On News
On the stock market today, SMCI stock tanked 19% to close at 443.49.
The once-highflying computer hardware vendor saw its shares hit a record high of 1,229 on March 8. Super Micro stock had surged on investor enthusiasm for the buildout of data centers to support artificial intelligence applications.
On Wednesday, CFRA Research analyst Shreya Gheewala cut her rating on SMCI stock to hold from buy following the Hindenburg report. She also slashed her price target to 454 from 729.
"While we believe the evidence presented does not conclusively demonstrate significant accounting malpractice or verifiable sanction evasions, SMCI's delayed 10-K filing and potential reputational damage raises concerns," Gheewala said in a client note.
Short Seller's Report Raises Questions
On Tuesday, SMCI stock sank 2.6% to close at 547.64. Earlier in the day, short seller Hindenburg Research accused Super Micro of accounting manipulation, export control failures, customer issues and other problems.
In a client note, JPMorgan analyst Samik Chatterjee said Hindenburg's report was "largely void of details around alleged wrongdoings from the company."
Chatterjee reiterated his overweight, or buy, rating on SMCI stock with a price target of 950.
"It is not surprising that the company has areas for improvement to further refine governance, transparency, and communication with investors, which would be more appropriate for a company of its size following its recent spurt of growth in conjunction with AI server demand," he said. "However, the lack thereof does not immediately suggest wrongdoing by the company, in our view."
Rivals Could Benefit From SMCI's Woes
Dell Technologies could benefit from Super Micro's problems, Evercore ISI analyst Amit Daryanani said in a client note titled "SMCI Pain = DELL Gains?"
Dell is poised to gain market share in AI servers as Super Micro deals with its negative publicity, he said.
SMCI stock is on the IBD Tech Leaders list. But it has a so-so IBD Composite Rating of 76 out of 99, according to IBD Stock Checkup.
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