Super Micro Computer (NASDAQ:SMCI) investors are stuck in a high-stakes waiting game, with February 25 looming as the critical deadline for submitting its audited financials.
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With SMCI’s Nasdaq listing hanging in the balance, speculation is running high. Investors are weighing whether now is the moment to pounce on shares of the AI server giant at what looks like a tempting discount. After all, the stock has plunged 54% over the past year.
That would be a bad idea, claims one investor, known by the pseudonym Kumquat Research.
“With the delisting deadline fast approaching, long-term investors should steer clear of this value trap,” cautions the 5-star investor.
Kumquat points to lingering governance issues, the same concerns that prompted SMCI’s previous auditor to resign. Despite an independent audit committee’s investigation in early December – which found no evidence of misconduct – the investor remains unconvinced. Until the company’s new audit firm fully endorses the findings, the risk remains too great to ignore, Kumquat argues.
While governance issues are at the forefront of Kumquat’s concerns, these are not the only problems. The investor cites evidence that the company is struggling to access the cash required to support the ramp-up for Nvidia’s Blackwell. One method the company is considering is via the private investment in the public equity route, which is not a good omen for shareholders as it often causes serious dilution.
“The implication here, in my opinion, is that Super Micro is having a hard time selling debt because no counterparty wants to lend money to a company without audited financial statements — at least not at an interest rate that Super Micro would be willing or able to pay,” Kumquat explains.
Furthermore, the recent DeepSeek revelations add another layer of difficulty, as any decrease in demand for AI hardware would have a deleterious impact on SMCI’s business.
Overall, despite the stock’s sharp decline, Kumquat isn’t tempted, noting: “The stock remains an extremely speculative play at current levels as the risk-reward profile does not appear favorable and sentiment and momentum are overwhelmingly negative.”
To this end, Kumquat is doubling down on his Sell rating on SMCI shares. (To watch Kumquat Research’s track record, click here)
Meanwhile, Wall Street isn’t exactly singing in harmony. Analysts appear cautious, with a mix of 1 Buy, 3 Hold, and 2 Sell ratings, landing SMCI with a consensus Hold (i.e. Neutral) stance. As for the road ahead, its 12-month price target of $26.80 suggests the shares will stay range-bound for the foreseeable future. (See SMCI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
