Super Micro Stock Jumps on Plan to Keep Nasdaq Listing

Shares of Super Micro Computer (SMCI) soared 31% on Tuesday 19 November after the company appointed BDO as its new auditor. The hope among investors is that the downtrodden firm is taking the necessary steps to keep its listing on the Nasdaq Exchange.

SMCI stock has gained over 50% in the last two trading days but remains well below its all-time high of $122.90. 

Super Micro's shares skyrocketed over 20 times their value in the two years from early 2022 to their peak in March when the stock was added to the S&P 500 index. However, the share price has taken a major hit owing to concerns it could get delisted from the Nasdaq thanks to its accounting practices. Let’s take a closer look at SMCI’s recent gains:

Super Micro’s New Plan

The stock had already gained around 16% on Monday, 18 November, after the company, a collaborator with Nvidia (NVDA) in delivering advanced servers powered by artificial intelligence (AI) chips and a recent supplier for Elon Musk's xAI, met a deadline set by the US SEC which gaveSuper Micro 6 weeks to submit a plan.

Super Micro said that its compliance plan demonstrates progress toward submitting overdue filings to the SEC. It aims to regain compliance with its periodic reporting obligations within the discretionary time frame allowed by the Nasdaq. (Source: Yahoo Finance)

Timeline of Events: Super Micro Computer

After the following succession of events in 2024, can Super Micro still be an AI darling on Wall Street?

• July: Ernst & Young (EY) raises concerns about Super Micro's governance, transparency, and internal control over financial reporting.  

• 27 August: Hindenburg Research reveals a short position, alleging "accounting manipulation" by Super Micro.  

• 17 September: Nasdaq notifies Super Micro of non-compliance with listing rules and grants the company 60 days to file its annual report or submit a plan to regain compliance.  

• 30 October:  EY resigns as Super Micro's auditor, prompting a 55% drop in the company’s stock price.

• 5 November: Super Micro, based in San Jose, California, lowers its sales targets for the September and December quarters in a business update.

• Early November: A special committee formed to investigate EY’s concerns reports no evidence of fraud.  

• 13 November: Super Micro announces it will delay filing its September quarter financial report as it works to appoint a new auditor and assess internal controls for the fiscal year ending 30 June 2024.  

Conclusion: Will Super Micro Stay Listed on the Nasdaq?

With a new auditor appointed, Super Micro will be in a position to submit its Form 10-K annual report for the fiscal year ending 30 June and its Form 10-Q quarterly report for the first quarter ending 30 September. 

This appears to have alleviated some investors' concerns about the company’s future, as demonstrated by the gain in the share price this week. 

However, what’s less clear is whether the company can regain the trust lost by its late filings and the suspected accounting manipulation reported by Hindenburg. Only time will tell.