Shares of Super Microcomputer (SMCI) soared about 40% in after-hours trading yesterday on news that the company hired a new auditor and avoided delisting from the Nasdaq. Shares rose 15.9% in regular trading on November 18 as investors speculated on the news. The 60-day deadline for server makers to submit plans to regain compliance with Nasdaq’s listing requirements was supposed to end yesterday.
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Details on SMCI’s new auditor and action plan
SMCI hired BDO USA, PC, as its new independent auditor, effective immediately, after Ernst & Young abruptly resigned in October. SMCI added that BDO is said to be among the top five accounting firms in the world and is well-known for its audit and insurance solutions.
President and CEO Charles Liang said SMCI is pleased to have BDO as its auditor and bring its financial accounting up to date. Additionally, the Company has filed plans to file with the SEC its 10-K Annual Report for the year ended June 30, 2024 and Quarterly Report for the period ended September 30, 2024 within the prescribed deadlines. Late filing of reports ensures that SMCI has up-to-date financial reporting.
good days have come again
For now, SMCI stock will remain listed on Nasdaq until the exchange considers the request for compliance with the deadline extension. Touted as one of the biggest beneficiaries of the artificial intelligence (AI) boom and a customer of Nvidia (NVDA) chips, SMCI has quickly become one of the hottest stocks in 2024.
However, a series of bad news caused SMCI stock to fall. Short seller Hindenburg Research accused SMCI of accounting fraud in August, and Ernst & Young resigned as the company’s auditor in October. These unfavorable aspects have caused SMCI stock to drop 65.5% over the past three months.
On the business side, SMCI seems to be doing well. Just yesterday, at the Supercomputing Conference in Atlanta, SMCI announced that it has designed and deployed a next-generation AI server that can use Nvidia’s Blackwell chips. This is a big step for SMCI, as the Blackwell platform is currently one of the most anticipated products in the AI space. Good days seem to be coming back for SMCI, but only time will tell if the company can stick to its plan and completely remove the pressure of delisting.
Is SMCI stock a good buy?
Wall Street is skeptical about SMCI stock, preferring to wait until things settle down. However, yesterday’s news may cause analysts to reconsider their recommendations.
SMCI stock currently has a Hold consensus rating on TipRanks. This is based on 3 Buy, 6 Hold, and 2 Sell ratings. Super Micro Computer’s average target price is $47.04, implying an upside potential of 118.4% from current levels. Meanwhile, SMCI stock has fallen 24.2% since the beginning of the year.
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