Super Micro Stock Plunges After Q4 Update Raises Concerns

Super Micro Shares plunged 22% on Wednesday to their lowest level since May of last year after the embattled server maker issued disappointing unaudited financial results and provided no specific plans to maintain its Nasdaq listing.

The stock fell to $21.55 in early afternoon trading and is now down 82% from its March high, a selloff that has wiped out about $57 billion of market capitalization.

Super Micro last week had its worst week on record in the market after the resignation of its auditor, Ernst & Young, the second accounting firm to leave in less than two years. The company faces accusations from an activist of accounting irregularities and of having shipped sensitive chips to sanctioned nations and companies, violating export controls.

Super Micro has not filed audited financial statements since May and risks being delisted from the Nasdaq if it does not report results for the latest fiscal year to the SEC by mid-November. The company said late Tuesday, reporting preliminary results for the fiscal first quarter, that it does not know when it will report its annual financial statements.

In a call with analysts, the company said it would not discuss any issues related to Ernst & Young’s decision to resign and did not address corporate governance issues. Chief Executive Charles Liang said Super Micro was actively in the process of hiring a new auditor.

Mizuho analysts suspended coverage of the stock on Wednesday “due to a lack of detailed, audited financial statements.” Analysts at Wedbush, who have the equivalent of a hold rating on the stock, said the report left “more questions than answers.”

“Management appears entirely focused on finding an auditor and resolving its late filing status,” the Wedbush analysts wrote. “However, we do not know how significant the obstacles might be to achieving this goal.”

Liang said on the call that the company is “urgently working to get back on track with our financial reporting.”

For the quarter ending Sept. 30, Super Micro said it generated net sales of between $5.9 billion and $6 billion. This figure is below analyst expectations of $6.45 billion, but still an increase of 181% year-over-year. The company’s business has been booming lately as it ships servers full of Nvidia Processors for artificial intelligence.

Super Micro shares soared 246% last year after jumping 87% in 2023. The stock hit a high of $118.81 in March, shortly after being added to the S&P 500.

Liang said demand is strong for Nvidia’s latest GPU, called Blackwell, which began shipping in recent weeks.

Asked by an analyst when Blackwell revenue might show up in Super Micro’s financials, Liang said “we ask Nvidia every day,” adding that the companies continue to work closely together.

“Our capacity is ready, but there are not enough new chips,” Liang said.

Analysts asked if the company’s plans to build Blackwell-based servers had changed, which could suggest that other server makers could receive additional capacity or Nvidia GPU allocations at the expense of Super Micro.

“To clarify one of the previous comments regarding Nvidia, we have the deepest relationship with Nvidia,” said Chief Financial Officer David Weigand. “We now have multiple next-gen projects in progress and we have spoken to Nvidia and they have confirmed that they have made no changes to the allocations. We maintain a strong relationship with them and we do not expect that to change.”

Super Micro’s forecast for the December quarter also came in below estimates. The company said revenue will be between $5.5 billion and $6.1 billion, below analysts’ average estimate of $6.86 billion, according to LSEG. Adjusted earnings per share will be 56 cents to 65 cents. Analysts were looking for earnings per share of 83 cents.

Super Micro said its board had commissioned a special committee to investigate Ernst & Young’s concerns. In a three-month investigation, the committee found there was “no evidence of fraud or misconduct” by management, the company said.

“The Committee recommends a number of corrective measures for the Company to strengthen its internal governance and oversight functions, and the Committee expects to deliver the full report on the work completed this week or next,” Super Micro said, adding that it has the intention to take all necessary measures to maintain its listing on Nasdaq.

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