Shares of Super Micro Computer (SMCI) tanked in after-hours trading after the computer hardware manufacturer reported mixed preliminary results for its first quarter of Fiscal Year 2025, which included a huge miss on guidance. Earnings per share are expected to come in between $0.75 and $0.76, which beat analysts’ consensus estimate of $0.73 per share. On the other hand, sales will likely be between $5.9 billion and $6 billion. This missed analysts’ expectations of $6.44 billion.
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However, the numbers aren’t the most important thing that investors are focusing on today. This is because trust in management has dropped significantly since SMCI’s auditor resigned last week after stating that it could no longer rely on management’s financial representations. As a result, today’s results are unaudited and subject to change, which makes information about SMCI’s accounting practices the main focus.
In this regard, the Special Committee tasked with investigating Super Micro’s accounting practices said that it found no evidence of fraud or misconduct from managers and board members. It also noted that it is recommending steps to strengthen internal governance but did not specify the details. However, the Committee expects to “deliver the full report on the completed work this week or next.” Separately, SMCI stated that it intends to make sure it remains compliant with Nasdaq (NDAQ) listing requirements.
SMCI’s Guidance for Q2 2025
Looking forward, management has provided the following guidance for Q2 2025:
- Q2 revenue between $5.5 billion and $6.1 billion versus estimates of $6.84 billion
- Q2 adjusted EPS of $0.56 to $0.65 compared to expectations of $0.81
As you can see, guidance was significantly worse than expected, which is likely what contributed to the stock’s after-hours move.
Investor Sentiment for SMCI Stock
Surprisingly, although SMCI’s stock price has been struggling, the sentiment among TipRanks investors is currently positive. Out of the 764,637 portfolios tracked by TipRanks, 4% hold SMCI stock. This is actually an increase from the previous earnings report when 2.9% of portfolios held SMCI shares.
In addition, the average portfolio weighting allocated towards SMCI among those who do have a position is 5.35%. This suggests that investors of the company are confident about its future, especially since 3.3% of those holding the stock increased their positions in the last 30 days.
However, it is worth noting that 0.9% actually decreased in the past week, which is most likely the result of the auditor’s resignation. Nevertheless, it appears that investors, overall, could view the company’s recent accounting troubles as temporary headwinds.
Is SMCI Stock a Good Buy?
Overall, analysts have a Hold consensus rating on SMCI stock based on three Buys, 10 Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 9% year-to-date decline, the average SMCI price target of $61.76 per share implies 138.64% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
