It’s been a roller-coaster ride for Super Micro Computer’s (NASDAQ: SMCI) stock this year, with a lot of big moves in both directions. After a hot start to the year, the company’s shares began to slide following a short report from Hindenburg Research that accused the company of accounting manipulation. That was soon followed by the company delaying the filing of its 10-K annual report.
The Wall Street Journal later reported that Supermicro was being investigated by the Department of Justice (DOJ) over potential accounting issues, addIing fuel to the fire, although the report was never confirmed by the company nor the DOJ.
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The stock later shot higher after the company announced that it has been shipping more than 100,000 graphic processing units (GPUs) per quarter.
That rally, however, faded on news that its auditor, Ernst and Young, was resigning and that it would need to find a new auditor to file its annual report. This delay put the company at risk of its stock getting delisted from the Nasdaq Stock Market.
Supermicro shares took a further hit after the company announced preliminary numbers for Q4 that came up well short of expectations. However, the stock was back to rally mode after the company announced it has found a new auditor.
For the year, the stock is currently down modestly, about 7% as of this writing, although it has a tendency to make some pretty big moves in a short period of time. Against that backdrop, let’s take a closer look at the company’s latest news and see if investors should consider buying the stock at current levels.
Supermicro shares soared over 30% after it named BDO its new auditor. Ernst and Young had earlier resigned, issuing a pretty harsh statement, saying it was “unwilling to be associated with the financial statements prepared by management” and that it has concerns about Supermicro’s governance, transparency, and internal controls.
The firm had only been Supermicro’s auditor since March 2023 after taking over from Deloitte & Touche.
Thus, getting BDO, which is one of the world’s five-largest accounting firms, to take over is a big potential win for the company. In a statement, Supermicro said, “This is an important next step to bring our financial statements current, an effort we are pursuing with both diligence and urgency.”
In addition to announcing a new auditor, Supermicro also said that it has submitted a compliance plan with the Nasdaq in hopes to get a filing extension and remain listed of the exchange. If the company were delisted, its shares would still trade, but it would now be on the over-the-counter (OTC) market. That could lead to its removal for the S&P 500 index, which is just joined earlier this year.
