By Super Micro Computer Inc (NASDAQ: SMCI) says it needs more time to file its financial update for the September quarter.
Shares of the AI server company are down another 2% on Wednesday.
SMCI already runs the risk of delisting as it’s unusually late in submitting its annual report as well.
Supermicro received a notice of non-compliance from Nasdaq on September 17th that allowed it 60 days to file its 10-K.
So, the company’s management has until the end of this week to submit a plan to regain compliance.
Failure to do so could delist Super Micro stock from Nasdaq.
Why did Supermicro delay its 10-Q?
Supermicro shares have been in freefall ever since Ernst & Young refused to continue as its auditor, citing concerns over the company’s governance and financial controls.
The California-based company has already confirmed a special committee investigating the flagged issues did not find any evidence of fraud.
Nonetheless, SMCI needs more time to hire a new auditor and conclude evaluation of internal controls before it files its 10-Q with the Securities & Exchange Commission, as per its statement on Wednesday.
Supermicro stock was once touted as one of the biggest beneficiaries of the artificial intelligence rally.
The AI server maker counts the likes of Nvidia and AMD as its customers.
SMCI is drowning under a sea of bad news
It’s been one bad news after another for Super Micro Computer in recent months.
Earlier this year, Hindenburg Research also cited “accounting manipulation” as it disclosed a sizable short position in SMCI.
What’s more alarming is that Supermicro all out refused to address questions related to corporate governance or EY’s decision to resign as it reported disappointing unaudited quarterly results last week.
The company hasn’t reported audited financials since May.
The lack of clarity, forthcomingness, and “full financial detailed and audited statements” made analysts at Mizuho decide in favor of suspending their rating and price target on Supermicro stock following the earnings call.
Supermicro stock remains a risky investment
Note that Super Micro Computer is not new to red flags.
Hudson Labs raised a few notable ones at this information technology company as early as 2022.
It tapped on artificial intelligence to set up a “related party concentration risk screen where Supermicro was one of the highest risk companies.”
SMCI also ranked significantly higher on “other forensic risks” as well, Kris Bennatti – the chief executive and co-founder of Hudson Labs told CNBC in a recent interview.
Nonetheless, Wall Street currently rates Supermicro stock a “hold”.
Analysts have an average price target of $37 on the AI firm which translates to a whopping 75% upside from here.
Having said that, recent developments coupled with the delisting threat suggest SMCI shares are suitable only for the most aggressive of investors at writing.
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