Shares of server maker Super Micro Computer (SMCI) have plunged 15% on news that the U.S. Justice Department (DOJ) has opened a probe into the company.
The Wall Street Journal was the first to report on the investigation, which is in its early stages. A prosecutor in the U.S. attorney’s office has requested information from Super Micro Computer about a former employee who had previously accused the company of accounting violations.
News of the Justice Department probe comes weeks after notorious short seller Hindenburg Research published a critical report on Super Micro Computer, accusing the company of “accounting manipulation.” Days after the Hindenburg Research report was made public, Super Micro Computer delayed the publication of its annual report with the U.S. Securities and Exchange Commission (SEC), Wall Street’s regulator.
Pressuring SMCI Stock
The critical report from Hindenburg Research and delayed annual report have pressured SMCI stock, sending the company’s share price down nearly 30% in the last month. Year-to-date, the company’s share price is still up 42%. However, it has come down substantially from earlier in the year when it was the top gainer in the benchmark S&P 500 index and outperforming high-flying chipmaker Nvidia (NVDA).
The U.S. Justice Department has not commented publicly on any probe or investigation related to Super Micro Computer. SMCI makes servers for websites, data storage and other applications, including artificial intelligence, that are used by companies such as Nvidia.
Is SMCI Stock a Buy?
Super Micro Computer’s stock has a consensus Hold rating from 13 Wall Street analysts. This rating is based on two Buy, 10 Hold and one Sell ratings issued in the last three months. The average price target of $613.92 implies 52.55% upside potential from current levels.
