Super Micro Computer (NASDAQ: SMCI) had been a strong performer in the tech stock market earlier this year. However, the company, which is well-known for producing servers, cooling systems, and storage components for the large data center market, is currently encountering difficulties.
Today, the company revealed a delay in submitting its 10-K report for the fiscal year 2024, which ended on June 30. Despite having released results for the fourth quarter and fiscal year on August 6, the company mentioned that there have been no updates to those results. Nonetheless, investors are responding to this news by selling off the stock, leading to a 24.6% decline as of 10:45 a.m. ET. The concerns have heightened following a recent report by a short-seller issued yesterday.
Investors are averse to uncertainty
Yesterday, Hindenburg Research disclosed a short position in Super Micro stock after a three-month investigation uncovered accounting issues and "sanctions and export control failures" within the company.
Despite the lack of response from management regarding Hindenburg's allegations and the filing delay, it remains unclear if the two events are related. Nevertheless, investors generally have little tolerance for uncertainty, especially in financial matters.
While Super Micro shares had previously surged, registering a growth of around 45% year-to-date, concerns have emerged due to decreasing gross margins amidst intensified competition, despite significant sales growth driven by the expansion of artificial intelligence (AI) computing capabilities in fiscal 2024.
Investors are now waiting for more information from the company to verify the accuracy of its previously disclosed financial data. For those contemplating investment, exercising caution is recommended as clarity on the current situation is essential. Reacting impulsively to the sell-off may not be the most prudent course of action, considering that more information is likely to be forthcoming to guide investment decisions.
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