Shares of Super Micro Computer (SMCI) cratered in today’s trading after the AI hardware company’s auditor, Ernst & Young LLP, resigned as its registered public accounting firm. Essentially, Ernst & Young has lost trust in SMCI management due to information that has made it unable to “rely on management’s and the Audit Committee’s representations.”
Unsurprisingly, Super Micro Computer stated that it disagreed with this decision, especially since the Special Committee tasked with investigating the firm’s accounting practices has not finished its review. For investors who were hoping that SMCI’s accounting issues were being resolved, today’s announcement adds a whole new layer of mistrust to the company.
In fact, shares have been struggling ever since short-seller Hindenburg Research accused the company of “accounting manipulation” and other questionable practices, which included violating export bans. With today’s drop, SMCI stock is now down 72% from its split-adjusted peak of $122.90 per share. Interestingly enough, though, shares had rallied so strongly from the beginning of the year to their peak that they are still up 22% on a year-to-date basis.
Is SMCI Stock a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on SMCI stock based on three Buys, nine Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average SMCI price target of $64.49 per share implies 88.24% upside potential.
