Super Micro Computer (SMCI) Says Special Committee Found No Evidence of Fraud
Market News

Super Micro Computer (SMCI) Says Special Committee Found No Evidence of Fraud

Story Highlights

Super Micro Computer announced yesterday that a Special Committee found no evidence of any financial fraud or wrongdoing. The AI infrastructure maker reported weaker-than-expected preliminary Q3 sales and issued lackluster guidance, dragging down its stock.

Super Micro Computer (SMCI) said yesterday that an independent Special Committee found no evidence of financial fraud or wrongdoing by SMCI’s board or management in the three-month long investigation and concluded that the board’s Audit Committee acted independently. These concerns were first highlighted by short seller Hindenburg in August and then aggravated by the chief auditor Ernst & Young’s abrupt exit last week. The Special Committee will release a detailed report of its investigation soon.

SMCI’s Financial Woes Weigh on the Stock

To make things worse, on an analyst call yesterday, SMCI management refrained from discussing or answering any questions related to the auditor’s resignation or corporate governance. SMCI stock was down 22.7% in pre-market trading as of the time of writing. Super Micro released preliminary Q3 results yesterday, with sales falling short of expectations. Investors and analysts are worried because these results will remain unaudited until verified by an official auditor. SMCI management said that the hunt for a new auditor is underway.

Additionally, SMCI said that it was uncertain about the exact date on which it would file its 10-K annual report, which was originally due at the end of August. Management stated that it understands the urgency of finding an auditor and becoming current on its financial reporting, failing which the company could face the risk of delisting its stock from the Nasdaq stock exchange.

Mizuho Suspends Rating on Dismal Outlook

Mizuho Securities analyst Vijay Rakesh suspended rating on SMCI stock following the dismal preliminary Q3 sales and soft guidance for the December quarter. The five-star analyst is concerned about the uncertainty related to the annual report filing, lack of detailed audited financials, and lingering issue of Nasdaq compliance.

Prior to the preliminary results and rating suspension, Rakesh had a Hold rating and $45 price target on SMCI stock.

Is SMCI a Good Stock to Buy?

Wall Street is growing increasingly cautious of its views on Super Micro Computer stock. On TipRanks, SMCI stock has a Hold consensus rating based on three Buys and ten Hold ratings. The average Super Micro Computer price target of $61.76 implies nearly 123% upside potential from current levels. This is because SMCI shares have lost 66.6% of their value in the past six months.

See more SMCI analyst ratings

Disclosure

Related Articles
Oliver RodziankoSuper Micro Computer’s (NASDAQ:SMCI) Fair Valuation Comes with High Risks
Radhika SaraogiSPY ETF Update, 11/7/2024 
Marty ShtrubelHans Mosesmann Halts Super Micro Computer Stock Coverage Amid Uncertainty
Go Ad-Free with Our App