The stock of Super Micro Computer (SMCI) is ending the trading week more than 50% higher, a development that is squeezing short sellers.
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In the past five days, SMCI stock has risen 53%, reversing a sharp downturn that began in the summer after the company that makes high-efficiency servers was accused of accounting malfeasance by short seller Hindenburg Research. Shares are up 12% to end the week on November 22.
The reversal comes after Super Micro announced that it has hired BDO as its new auditor and submitted plans to remain compliant with the listing rules of the Nasdaq exchange on which its stock trades. The company had faced delisting from the Nasdaq after its previous accountant Ernst & Young resigned, and because it is late in filing its annual report with the U.S. Securities and Exchange Commission (SEC).
The sharp rise in SMCI stock is hurting Wall Street short sellers, who are now down $1.4 billion in mark-to-market losses since the company’s shares hit a year-to-date low of $18.01 on November 14, according to data from S3 Partners.
Nvidia Shoutout
Investors appear to be cheering the news that Super Micro Computer is getting its finances in order. However, SMCI stock is also getting a boost from a shoutout it received earlier this week from Nvidia (NVDA) CEO Jensen Huang.
During Nvidia’s earnings call with analysts and media, Huang singled out Super Micro Computer, calling the server company one of Nvidia’s “great partners.” That comment seems to have instilled confidence in Super Micro Computer, whose servers are used to run Nvidia’s AI processors.
However, even with this week’s big move higher, SMCI stock is still trading 73% below its 52-week high of $122.90 per share.
Is SMCI Stock a Buy?
Super Micro Computer’s stock has a consensus Hold rating among 10 Wall Street analysts. That rating is based on two Buy, six Hold, and two Sell recommendations made in the last three months. The average SMCI price target of $39.43 implies 19.56% upside from current levels.
