Super Micro Computer, Inc. (SMCI, Financial) announced the appointment of BDO USA as its new auditing firm and submitted a compliance plan to Nasdaq to extend its listing status. As a result, SMCI's stock saw a significant increase, closing up 15.93% and surging nearly 40% in after-hours trading.
November 18 marked the deadline for SMCI to submit its delayed 2023 fiscal year 10-K annual report or a compliance plan to meet Nasdaq listing requirements. Failure to comply could lead to consequences such as delisting from Nasdaq, removal from the S&P 500 index, and the need to repay $1.725 billion in bonds.
SMCI faced challenges after Ernst & Young, its former auditor, resigned on October 24, delaying the annual report. This resignation followed a short-selling report by Hindenburg Research accusing SMCI of financial misconduct related to affiliate transactions, leading to a stock price drop. Legal investigations were also initiated.
Securing a new auditor to handle the situation was crucial for SMCI amidst investor concerns. The appointment of BDO USA and submission of a compliance plan provide temporary relief, but uncertainty remains about whether the audit will be completed and the 10-K report submitted on time.
Moreover, SMCI, heavily reliant on NVIDIA's GPU chips, faced accusations of financial fraud, prompting NVIDIA to transfer some orders to other suppliers. With NVIDIA's Blackwell chips sold out for the next year, SMCI faces significant challenges securing future orders despite any potential clearance of wrongdoing.
Additionally, competitors Dell Technologies and Hewlett Packard Enterprise have started to capture SMCI's market share in the data center arena, including vying for Elon Musk’s upcoming largest global data center project.
Despite recent stock price increases to over $30 per share, SMCI still remains far from its March high of $122 per share and faces the challenge of rebuilding investor trust.
