Super Micro Computer: You're Gambling If You Buy This, Not Investing

Seeking Alpha12-04

SummarySMCI's recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.SMCI's past issues include NASDAQ delisting, SEC fines...

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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

Financial Freedom Fund
12-05
Financial Freedom Fund
Totally disagree. You could have used "very high risk" or "uninvestible". But bear in mind, the CURRENT price accounts for the inherent risk NOW. This is a regulated stock market not a casino. Options must be gambling too? Justice department investigation. It will at most end with a fine and settlement. And it will be good news. Delisting from Nasdaq? Any news attributing the drop in share price after SMCI filed it's compliance plan is inaccurate. Nasdaq should approve the plan if it displayed a pathway to compliance. SMCI would be given 180 days to comply. So, we can discuss delisting possibility but in the final 45 days BDO is not a Big 4 firm. Not the same league. Big 4 firms are premier but it is myopic to only highlight BDO's past infractions without mentioning the many Big 4's infrac
- MoiraHorace:
  It's interesting how the perception of risk can vary so widely.
- pizzix:
  Great insights! Love your detailed analysis! [Applaud]
- Tigerous:
  Thx. Look forward to that. I’m holding some $SUPER MICRO COMPUTER INC(SMCI)$ just think it will go back to where it should be
- Chesterton:
  Trading is gambling
LeonardKSW
12-04
LeonardKSW
Nothing is so called 'investment'..everything here is a gambling... be realistic
9Jansen
12-04
9Jansen
Chill [Cool]
WealthBuilder
12-04
WealthBuilder
He has lost his underwear shorting SMCI , writing article to try recovering what he has lost
- RUW:
  [Happy]
bluekiwiseed
12-04
bluekiwiseed
Another of those news seeking to encourage people to short sell SMCI because you missed the swing highs. I have already discussed this in my other post, but I cannot mention further that perceptions, not reality, shape the downfall of SMCI. You're basing your argument on the reputation and accusation of some companies, without actually knowing the inner workings of SMCI. SMCI's downfall represents the classic case of overperforming and provoking certain big shots. But the narrative created by these big shots are losing ground; even JP Morgan has a cautious but rather optimistic outlook on SMCI now. Whether BDO is part of the Big Four or not has no meaning. As JP Morgan states, only two things matter now: whether BDO will recognise the special committee's report (no account
- BartonBecky:
  Your insights are valuable

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Of course, when we invest, there's always some unknowns and risks to take, but for me here, there's just way too many unknowns, which makes it a very illogical investment.BackgroundSMCI has been on a crazy ride throughout 2024, rising from $28 back in January all the way up to $115 in March, which equates to a 307% increase in 3 months.It then dropped down to $18 by November 15th, erasing 85% of the total market cap. This drop came after Ernst & Young (SMCI's auditor) resigned on October 24th. Ernst & Young cited reasons including:Lack of trust in managementWeak internal controlsLack of board independenceWhen an auditor resigns from auditing a client the size of SMCI it's never a good sign. Auditors spend hours fighting to win over the biggest clients which allows them to rake in the huge audit fees, but when they deem the risk of being associated with a listed client to be far more negative than the huge audit fees they would receive, there's likely something out of the ordinary going on.Here's why SMCI is not worth investing into.If this auditor resignation was a one-off issue, then I'd be inclined to give SMCI the benefit of doubt (though I'd still remain extremely cautious), but unfortunately this negativity around SMCI is not a one-off at all.The past 6 years has seen:NASDAQ delisting$17.5 million fine to SECHindenburg Research (one of the most famous short sellers)Department of Justice probeI'm going to go over each one of these to explain exactly what's happened and my take on them all.NASDAQ delisting - 2018SMCI was temporarily delisted from the NASDAQ stock exchange in August 2018 due to failure to comply with NASDAQ timelines of financial reports. Companies get delisted for many reasons, however the 3 main reasons are:Voluntary delisting.Falling below a certain market cap or $1.00 stock price.Accounting issues/missed deadlines.Reason 3 is exactly why SMCI got delisted, and it tends to be the least common and perhaps most serious due to the internal inefficiencies. NASDAQ generally does have fairly long \"grace periods\" meaning SMCI failed to comply with the extended NASDAQ deadlines, something which has not happened to a company of SMCI's size in a long time.FineIn 2020, SMCI paid a $17.5 million fine to the SEC for accounting violations in which they neither admitted nor denied the SEC findings. The violations were due to incorrect revenue recognition, understating expenses, and other accounting violations over a period of 3 years.Arguably a one-off instance like this would not cause too much panic, but the continuous nature of this raises skepticism.Department of JusticeOn top of all this negativity, SMCI has an ongoing DoJ (Department of Justice) probe which is looking into accounting violations. DoJ probes are a big deal and are likely to have an overarching effect on the SMCI stock price even if all of all the other unknowns start to become more clear.As I mentioned before with the Hindenburg research, we have to take their report with a pinch of salt since they are a short-seller after all. However, an investigation by the DoJ is much more serious and anything that comes up in that investigation will materially affect SMCI's future.BDO AppointmentThe positive news after all of this is that SMCI managed to appoint BDO (the 5th largest accounting firm) after all of the above incidents, which has to be a win because it gives them hope to at least restore investor confidence, and prepare some financial statements. That's all the good news I can say about this though.The bad news is that BDO isn't a big 4 company that SMCI would have appointed. BDO also has had poor results over recent years in terms of audit quality. To put it simply, SMCI would not have wanted to appoint an auditor outside of the Big 4. It's a shame that this is the way it is, but for a company in the S&P 500, Big 4 auditors are by far the most common. Unless there's a good reason not to appoint a Big 4 auditor, S&P 500 companies simply look a bit more questionable if they don't have a Big 4 company auditing them.The other important thing to note is that even though SMCI has appointed a BDO, initial screening or conversations with EY (previous auditor) have not occurred. This was all disclosed in the 8-K but obviously wasn't part of the headlines. Simply what is happening is that BDO are the only company to at least consider looking at the SMCI books in the hope that everything is ok, and therefore they potentially have one of the biggest clients on the books.In my opinion, realistically, the issues that EY found won't have been resolved and BDO will also likely find these issues, meaning they'll not sign off.Let me take this even further. A first year audit takes a long time. It includes getting a very solid understanding of the company, the internal controls, previous period's numbers etc., etc. In my opinion, the entire process likely cannot happen before February 2025, which is when NASDAQ has granted a filing extension until.If the BDO does manage to get all this work done, and assuming there's no issues found (unlikely in my opinion), there is still a chance of secondary reviews by regulators.So is SMCI a buy, sell, or hold?SMCI has performed well the last 3 weeks post appointment of auditor, BDO, plus a short squeeze. Whilst the share price shows some potential signs of recovery, I hope this article made it clear exactly how much risk there still is.SMCI still has to get BDO to audit their financials by February without any findings, a potential secondary review, and also get through the DoJ investigation to essentially survive. If any of these come back with material findings, I think there's a very good chance that SMCI gets delisted, which will, of course, have material consequences for all investors.Of course, I may be wrong here, and I may be overly worried about the legitimacy of the financials, but when there's hundreds and if not thousands of other stocks without any risk of these issues, I don't see why it's worth risking an investment into SMCI.My overall take is that I'd give it a 50:50 chance as to whether SMCI recovers and, in my opinion, investing in them is much more gambling, rather than data driven, educated, smart investing.","kind":"news","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":378099152875848,"gmtCreate":1733352145624,"gmtModify":1733390419692,"author":{"id":"4106871034809890","authorId":"4106871034809890","name":"Financial Freedom Fund","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"hat":"https://static.tigerbbs.com/f84d87792f02cf78e80ee34979fd31e5","crmLevel":8,"crmLevelSwitch":0,"idStr":"4106871034809890","authorIdStr":"4106871034809890"},"htmlText":"Totally disagree. You could have used \"very high risk\" or \"uninvestible\". But bear in mind, the CURRENT price accounts for the inherent risk NOW. This is a regulated stock market not a casino. Options must be gambling too? Justice department investigation. It will at most end with a fine and settlement. And it will be good news. Delisting from Nasdaq? Any news attributing the drop in share price after SMCI filed it's compliance plan is inaccurate. Nasdaq should approve the plan if it displayed a pathway to compliance. SMCI would be given 180 days to comply. So, we can discuss delisting possibility but in the final 45 days BDO is not a Big 4 firm. Not the same league. Big 4 firms are premier but it is myopic to only highlight BDO's past infractions without mentioning the many Big 4's infrac","listText":"Totally disagree. You could have used \"very high risk\" or \"uninvestible\". But bear in mind, the CURRENT price accounts for the inherent risk NOW. This is a regulated stock market not a casino. Options must be gambling too? Justice department investigation. It will at most end with a fine and settlement. And it will be good news. Delisting from Nasdaq? Any news attributing the drop in share price after SMCI filed it's compliance plan is inaccurate. Nasdaq should approve the plan if it displayed a pathway to compliance. SMCI would be given 180 days to comply. So, we can discuss delisting possibility but in the final 45 days BDO is not a Big 4 firm. Not the same league. Big 4 firms are premier but it is myopic to only highlight BDO's past infractions without mentioning the many Big 4's infrac","text":"Totally disagree. You could have used \"very high risk\" or \"uninvestible\". But bear in mind, the CURRENT price accounts for the inherent risk NOW. This is a regulated stock market not a casino. Options must be gambling too? Justice department investigation. It will at most end with a fine and settlement. And it will be good news. Delisting from Nasdaq? Any news attributing the drop in share price after SMCI filed it's compliance plan is inaccurate. Nasdaq should approve the plan if it displayed a pathway to compliance. SMCI would be given 180 days to comply. So, we can discuss delisting possibility but in the final 45 days BDO is not a Big 4 firm. Not the same league. Big 4 firms are premier but it is myopic to only highlight BDO's past infractions without mentioning the many Big 4's infrac","images":[],"top":1,"highlighted":1,"essential":2,"paper":1,"likeSize":70,"commentSize":4,"repostSize":3,"link":"https://ttm.financial/post/378099152875848","repostId":1199304506,"repostType":2,"repost":{"id":"1199304506","kind":"news","pubTimestamp":1733283900,"share":"https://ttm.financial/m/news/1199304506?lang=&edition=fundamental","pubTime":"2024-12-04 11:45","market":"us","language":"en","title":"Super Micro Computer: You're Gambling If You Buy This, Not Investing","url":"https://stock-news.laohu8.com/highlight/detail?id=1199304506","media":"Seeking Alpha","summary":"SummarySMCI's recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.SMCI's past issues include NASDAQ delisting, SEC fines","content":"<html><head></head><body><h2 id=\"id_2210350387\">Summary</h2><ul style=\"\"><li><p>SMCI&#39;s recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.</p></li><li><p>SMCI&#39;s past issues include NASDAQ delisting, SEC fines, which all raise serious concerns about its financial integrity.</p></li><li><p>The appointment of BDO as the new auditor offers some hope but doesn&#39;t eliminate the significant risks and unresolved issues identified by Ernst &amp; Young.</p></li><li><p>Investing in SMCI now is more akin to gambling than smart investing due to the high level of unknowns and potential for severe negative outcomes.</p></li></ul><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/d0dd59825e09cdca1d96afc5c7f9a0d1\" alt=\"SlavkoSereda/iStock via Getty Images\" title=\"SlavkoSereda/iStock via Getty Images\" tg-width=\"750\" tg-height=\"500\"/><span>SlavkoSereda/iStock via Getty Images</span></p><h2 id=\"id_2160079058\">Introduction</h2><p>I mostly like to talk about buying opportunities here on Seeking Alpha, but I&#39;ve noted that a lot of people have been buying Super Micro Computer (NASDAQ:SMCI) recently, post the news that they appointed BDO as auditor.</p><p>Despite this appointment having some potential good news and a sign of hope, there&#39;s way too many unknowns and risk factors that, as investors on the outside, we just don&#39;t know the answers to. Of course, when we invest, there&#39;s always some unknowns and risks to take, but for me here, there&#39;s just way too many unknowns, which makes it a very illogical investment.</p><h2 id=\"id_1452235947\">Background</h2><p>SMCI has been on a crazy ride throughout 2024, rising from $28 back in January all the way up to $115 in March, which equates to a 307% increase in 3 months.</p><p>It then dropped down to $18 by November 15th, erasing 85% of the total market cap. This drop came after Ernst &amp; Young (SMCI&#39;s auditor) resigned on October 24th. Ernst &amp; Young cited reasons including:</p><ul style=\"\"><li><p>Lack of trust in management</p></li><li><p>Weak internal controls</p></li><li><p>Lack of board independence</p></li></ul><p>When an auditor resigns from auditing a client the size of SMCI it&#39;s never a good sign. Auditors spend hours fighting to win over the biggest clients which allows them to rake in the huge audit fees, but when they deem the risk of being associated with a listed client to be far more negative than the huge audit fees they would receive, there&#39;s likely something out of the ordinary going on.</p><h2 id=\"id_146560957\">Here&#39;s why SMCI is not worth investing into.</h2><p>If this auditor resignation was a one-off issue, then I&#39;d be inclined to give SMCI the benefit of doubt (though I&#39;d still remain extremely cautious), but unfortunately this negativity around SMCI is not a one-off at all.</p><p>The past 6 years has seen:</p><ul style=\"\"><li><p>NASDAQ delisting</p></li><li><p>$17.5 million fine to SEC</p></li><li><p>Hindenburg Research (one of the most famous short sellers)</p></li><li><p>Department of Justice probe</p></li></ul><p>I&#39;m going to go over each one of these to explain exactly what&#39;s happened and my take on them all.</p><h3 id=\"id_2241418678\">NASDAQ delisting - 2018</h3><p>SMCI was temporarily delisted from the NASDAQ stock exchange in August 2018 due to failure to comply with NASDAQ timelines of financial reports. Companies get delisted for many reasons, however the 3 main reasons are:</p><ol start=\"1\" style=\"\"><li><p>Voluntary delisting.</p></li><li><p>Falling below a certain market cap or $1.00 stock price.</p></li><li><p>Accounting issues/missed deadlines.</p></li></ol><p>Reason 3 is exactly why SMCI got delisted, and it tends to be the least common and perhaps most serious due to the internal inefficiencies. NASDAQ generally does have fairly long &#34;grace periods&#34; meaning SMCI failed to comply with the extended NASDAQ deadlines, something which has not happened to a company of SMCI&#39;s size in a long time.</p><h3 id=\"id_37544222\">Fine</h3><p>In 2020, SMCI paid a $17.5 million fine to the SEC for accounting violations in which they neither admitted nor denied the SEC findings. The violations were due to incorrect revenue recognition, understating expenses, and other accounting violations over a period of 3 years.</p><p>Arguably a one-off instance like this would not cause too much panic, but the continuous nature of this raises skepticism.</p><h3 id=\"id_1199563137\">Department of Justice</h3><p>On top of all this negativity, SMCI has an ongoing DoJ (Department of Justice) probe which is looking into accounting violations. DoJ probes are a big deal and are likely to have an overarching effect on the SMCI stock price even if all of all the other unknowns start to become more clear.</p><p>As I mentioned before with the Hindenburg research, we have to take their report with a pinch of salt since they are a short-seller after all. However, an investigation by the DoJ is much more serious and anything that comes up in that investigation will materially affect SMCI&#39;s future.</p><h3 id=\"id_494708400\">BDO Appointment</h3><p>The positive news after all of this is that SMCI managed to appoint BDO (the 5th largest accounting firm) after all of the above incidents, which has to be a win because it gives them hope to at least restore investor confidence, and prepare some financial statements. That&#39;s all the good news I can say about this though.</p><p>The bad news is that BDO isn&#39;t a big 4 company that SMCI would have appointed. BDO also has had poor results over recent years in terms of audit quality. To put it simply, SMCI would not have wanted to appoint an auditor outside of the Big 4. It&#39;s a shame that this is the way it is, but for a company in the S&amp;P 500, Big 4 auditors are by far the most common. Unless there&#39;s a good reason not to appoint a Big 4 auditor, S&amp;P 500 companies simply look a bit more questionable if they don&#39;t have a Big 4 company auditing them.</p><p>The other important thing to note is that even though SMCI has appointed a BDO, initial screening or conversations with EY (previous auditor) have not occurred. This was all disclosed in the 8-K but obviously wasn&#39;t part of the headlines. Simply what is happening is that BDO are the only company to at least consider looking at the SMCI books in the hope that everything is ok, and therefore they potentially have one of the biggest clients on the books.</p><p>In my opinion, realistically, the issues that EY found won&#39;t have been resolved and BDO will also likely find these issues, meaning they&#39;ll not sign off.</p><p>Let me take this even further. A first year audit takes a long time. It includes getting a very solid understanding of the company, the internal controls, previous period&#39;s numbers etc., etc. In my opinion, the entire process likely cannot happen before February 2025, which is when NASDAQ has granted a filing extension until.</p><p>If the BDO does manage to get all this work done, and assuming there&#39;s no issues found (unlikely in my opinion), there is still a chance of secondary reviews by regulators.</p><h2 id=\"id_4231930187\">So is SMCI a buy, sell, or hold?</h2><p>SMCI has performed well the last 3 weeks post appointment of auditor, BDO, plus a short squeeze. Whilst the share price shows some potential signs of recovery, I hope this article made it clear exactly how much risk there still is.</p><p>SMCI still has to get BDO to audit their financials by February without any findings, a potential secondary review, and also get through the DoJ investigation to essentially survive. If any of these come back with material findings, I think there&#39;s a very good chance that SMCI gets delisted, which will, of course, have material consequences for all investors.</p><p>Of course, I may be wrong here, and I may be overly worried about the legitimacy of the financials, but when there&#39;s hundreds and if not thousands of other stocks without any risk of these issues, I don&#39;t see why it&#39;s worth risking an investment into SMCI.</p><p>My overall take is that I&#39;d give it a 50:50 chance as to whether SMCI recovers and, in my opinion, investing in them is much more gambling, rather than data driven, educated, smart investing.</p></body></html>","source":"lsy1728464409321","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Super Micro Computer: You're Gambling If You Buy This, Not Investing</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSuper Micro Computer: You're Gambling If You Buy This, Not Investing\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-04 11:45 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4741870-super-micro-computer-smci-gambling-if-you-buy-not-investing><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummarySMCI's recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.SMCI's past issues include NASDAQ delisting, SEC fines...</p>\n\n<a href=\"https://seekingalpha.com/article/4741870-super-micro-computer-smci-gambling-if-you-buy-not-investing\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SMCI":"超微电脑"},"source_url":"https://seekingalpha.com/article/4741870-super-micro-computer-smci-gambling-if-you-buy-not-investing","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1199304506","content_text":"SummarySMCI's recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.SMCI's past issues include NASDAQ delisting, SEC fines, which all raise serious concerns about its financial integrity.The appointment of BDO as the new auditor offers some hope but doesn't eliminate the significant risks and unresolved issues identified by Ernst & Young.Investing in SMCI now is more akin to gambling than smart investing due to the high level of unknowns and potential for severe negative outcomes.SlavkoSereda/iStock via Getty ImagesIntroductionI mostly like to talk about buying opportunities here on Seeking Alpha, but I've noted that a lot of people have been buying Super Micro Computer (NASDAQ:SMCI) recently, post the news that they appointed BDO as auditor.Despite this appointment having some potential good news and a sign of hope, there's way too many unknowns and risk factors that, as investors on the outside, we just don't know the answers to. Of course, when we invest, there's always some unknowns and risks to take, but for me here, there's just way too many unknowns, which makes it a very illogical investment.BackgroundSMCI has been on a crazy ride throughout 2024, rising from $28 back in January all the way up to $115 in March, which equates to a 307% increase in 3 months.It then dropped down to $18 by November 15th, erasing 85% of the total market cap. This drop came after Ernst & Young (SMCI's auditor) resigned on October 24th. Ernst & Young cited reasons including:Lack of trust in managementWeak internal controlsLack of board independenceWhen an auditor resigns from auditing a client the size of SMCI it's never a good sign. Auditors spend hours fighting to win over the biggest clients which allows them to rake in the huge audit fees, but when they deem the risk of being associated with a listed client to be far more negative than the huge audit fees they would receive, there's likely something out of the ordinary going on.Here's why SMCI is not worth investing into.If this auditor resignation was a one-off issue, then I'd be inclined to give SMCI the benefit of doubt (though I'd still remain extremely cautious), but unfortunately this negativity around SMCI is not a one-off at all.The past 6 years has seen:NASDAQ delisting$17.5 million fine to SECHindenburg Research (one of the most famous short sellers)Department of Justice probeI'm going to go over each one of these to explain exactly what's happened and my take on them all.NASDAQ delisting - 2018SMCI was temporarily delisted from the NASDAQ stock exchange in August 2018 due to failure to comply with NASDAQ timelines of financial reports. Companies get delisted for many reasons, however the 3 main reasons are:Voluntary delisting.Falling below a certain market cap or $1.00 stock price.Accounting issues/missed deadlines.Reason 3 is exactly why SMCI got delisted, and it tends to be the least common and perhaps most serious due to the internal inefficiencies. NASDAQ generally does have fairly long \"grace periods\" meaning SMCI failed to comply with the extended NASDAQ deadlines, something which has not happened to a company of SMCI's size in a long time.FineIn 2020, SMCI paid a $17.5 million fine to the SEC for accounting violations in which they neither admitted nor denied the SEC findings. The violations were due to incorrect revenue recognition, understating expenses, and other accounting violations over a period of 3 years.Arguably a one-off instance like this would not cause too much panic, but the continuous nature of this raises skepticism.Department of JusticeOn top of all this negativity, SMCI has an ongoing DoJ (Department of Justice) probe which is looking into accounting violations. DoJ probes are a big deal and are likely to have an overarching effect on the SMCI stock price even if all of all the other unknowns start to become more clear.As I mentioned before with the Hindenburg research, we have to take their report with a pinch of salt since they are a short-seller after all. However, an investigation by the DoJ is much more serious and anything that comes up in that investigation will materially affect SMCI's future.BDO AppointmentThe positive news after all of this is that SMCI managed to appoint BDO (the 5th largest accounting firm) after all of the above incidents, which has to be a win because it gives them hope to at least restore investor confidence, and prepare some financial statements. That's all the good news I can say about this though.The bad news is that BDO isn't a big 4 company that SMCI would have appointed. BDO also has had poor results over recent years in terms of audit quality. To put it simply, SMCI would not have wanted to appoint an auditor outside of the Big 4. It's a shame that this is the way it is, but for a company in the S&P 500, Big 4 auditors are by far the most common. Unless there's a good reason not to appoint a Big 4 auditor, S&P 500 companies simply look a bit more questionable if they don't have a Big 4 company auditing them.The other important thing to note is that even though SMCI has appointed a BDO, initial screening or conversations with EY (previous auditor) have not occurred. This was all disclosed in the 8-K but obviously wasn't part of the headlines. Simply what is happening is that BDO are the only company to at least consider looking at the SMCI books in the hope that everything is ok, and therefore they potentially have one of the biggest clients on the books.In my opinion, realistically, the issues that EY found won't have been resolved and BDO will also likely find these issues, meaning they'll not sign off.Let me take this even further. A first year audit takes a long time. It includes getting a very solid understanding of the company, the internal controls, previous period's numbers etc., etc. In my opinion, the entire process likely cannot happen before February 2025, which is when NASDAQ has granted a filing extension until.If the BDO does manage to get all this work done, and assuming there's no issues found (unlikely in my opinion), there is still a chance of secondary reviews by regulators.So is SMCI a buy, sell, or hold?SMCI has performed well the last 3 weeks post appointment of auditor, BDO, plus a short squeeze. Whilst the share price shows some potential signs of recovery, I hope this article made it clear exactly how much risk there still is.SMCI still has to get BDO to audit their financials by February without any findings, a potential secondary review, and also get through the DoJ investigation to essentially survive. If any of these come back with material findings, I think there's a very good chance that SMCI gets delisted, which will, of course, have material consequences for all investors.Of course, I may be wrong here, and I may be overly worried about the legitimacy of the financials, but when there's hundreds and if not thousands of other stocks without any risk of these issues, I don't see why it's worth risking an investment into SMCI.My overall take is that I'd give it a 50:50 chance as to whether SMCI recovers and, in my opinion, investing in them is much more gambling, rather than data driven, educated, smart investing.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":378257662214456,"gmtCreate":1733390842414,"gmtModify":1733392554458,"authorId":9000000000000475,"author":{"id":9000000000000475,"idStr":"9000000000000475","authorId":9000000000000475,"name":"MoiraHorace","avatar":"https://static.tigerbbs.com/8bf4dddd6d4678cc04a35cf677e4fd21","vip":8,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":378099152875848,"type":1,"supId":0,"prevId":0,"content":"It's interesting how the perception of risk can vary so widely.","text":"It's interesting how the perception of risk can vary so widely.","html":"It's interesting how the perception of risk can vary so widely."},{"id":378319315951768,"gmtCreate":1733390841361,"gmtModify":1733392545749,"authorId":9000000000000409,"author":{"id":9000000000000409,"idStr":"9000000000000409","authorId":9000000000000409,"name":"pizzix","avatar":"https://static.tigerbbs.com/742a1a3fe6754169c97157f6d9276916","vip":8,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":378099152875848,"type":1,"supId":0,"prevId":0,"content":"Great insights! Love your detailed analysis! [Applaud]","text":"Great insights! Love your detailed analysis! [Applaud]","html":"Great insights! Love your detailed analysis! [Applaud]"},{"id":378401644978600,"gmtCreate":1733392533749,"gmtModify":1733392538442,"authorId":4195362055063892,"author":{"id":4195362055063892,"idStr":"4195362055063892","authorId":4195362055063892,"name":"Tigerous","avatar":"https://community-static.tradeup.com/news/1cc88e6e01866542324985e4c7ce6394","vip":1,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":378099152875848,"type":1,"supId":0,"prevId":0,"content":"<p>Thx. Look forward to that. I’m holding some  <a class=\"teditor-mention\" data-mention-id=\"SMCI\" data-mention-name=\"SUPER MICRO COMPUTER INC\" href=\"https://ttm.financial/S/SMCI\">$SUPER MICRO COMPUTER INC(SMCI)$</a> just think it will go back to where it should be </p>","text":"<p>Thx. Look forward to that. I’m holding some  <a class=\"teditor-mention\" data-mention-id=\"SMCI\" data-mention-name=\"SUPER MICRO COMPUTER INC\" href=\"https://ttm.financial/S/SMCI\">$SUPER MICRO COMPUTER INC(SMCI)$</a> just think it will go back to where it should be </p>","html":"<p>Thx. Look forward to that. I’m holding some  <a class=\"teditor-mention\" data-mention-id=\"SMCI\" data-mention-name=\"SUPER MICRO COMPUTER INC\" href=\"https://ttm.financial/S/SMCI\">$SUPER MICRO COMPUTER INC(SMCI)$</a> just think it will go back to where it should be </p>"},{"id":378401333449128,"gmtCreate":1733392457692,"gmtModify":1733392462496,"authorId":10000000000010974,"author":{"id":10000000000010974,"idStr":"10000000000010974","authorId":10000000000010974,"name":"Chesterton","avatar":"https://static.tigerbbs.com/43a0aed7518f515997f95ed495391d65","vip":8,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":378099152875848,"type":1,"supId":0,"prevId":0,"content":"<p>Trading is gambling <span class=\"teditor-emoji\"></span></p>","text":"<p>Trading is gambling <span class=\"teditor-emoji\"></span></p>","html":"<p>Trading is gambling <span class=\"teditor-emoji\"></span></p>"}],"langContent":"EN"},{"id":378011173347376,"gmtCreate":1733315762144,"gmtModify":1733315766297,"author":{"id":"3569318025811476","authorId":"3569318025811476","name":"LeonardKSW","avatar":"https://static.tigerbbs.com/eeba92ccfc8a91444aa3e36de4a39425","vip":1,"hat":"https://static.tigerbbs.com/50a4c8d97279fa9f8f1fa9749a6bdff4","crmLevel":6,"crmLevelSwitch":0,"idStr":"3569318025811476","authorIdStr":"3569318025811476"},"htmlText":"Nothing is so called 'investment'..everything here is a gambling... be realistic","listText":"Nothing is so called 'investment'..everything here is a gambling... be realistic","text":"Nothing is so called 'investment'..everything here is a gambling... be realistic","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/378011173347376","repostId":1199304506,"repostType":2,"repost":{"id":"1199304506","kind":"news","pubTimestamp":1733283900,"share":"https://ttm.financial/m/news/1199304506?lang=&edition=fundamental","pubTime":"2024-12-04 11:45","market":"us","language":"en","title":"Super Micro Computer: You're Gambling If You Buy This, Not Investing","url":"https://stock-news.laohu8.com/highlight/detail?id=1199304506","media":"Seeking Alpha","summary":"SummarySMCI's recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.SMCI's past issues include NASDAQ delisting, SEC fines","content":"<html><head></head><body><h2 id=\"id_2210350387\">Summary</h2><ul style=\"\"><li><p>SMCI&#39;s recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.</p></li><li><p>SMCI&#39;s past issues include NASDAQ delisting, SEC fines, which all raise serious concerns about its financial integrity.</p></li><li><p>The appointment of BDO as the new auditor offers some hope but doesn&#39;t eliminate the significant risks and unresolved issues identified by Ernst &amp; Young.</p></li><li><p>Investing in SMCI now is more akin to gambling than smart investing due to the high level of unknowns and potential for severe negative outcomes.</p></li></ul><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/d0dd59825e09cdca1d96afc5c7f9a0d1\" alt=\"SlavkoSereda/iStock via Getty Images\" title=\"SlavkoSereda/iStock via Getty Images\" tg-width=\"750\" tg-height=\"500\"/><span>SlavkoSereda/iStock via Getty Images</span></p><h2 id=\"id_2160079058\">Introduction</h2><p>I mostly like to talk about buying opportunities here on Seeking Alpha, but I&#39;ve noted that a lot of people have been buying Super Micro Computer (NASDAQ:SMCI) recently, post the news that they appointed BDO as auditor.</p><p>Despite this appointment having some potential good news and a sign of hope, there&#39;s way too many unknowns and risk factors that, as investors on the outside, we just don&#39;t know the answers to. Of course, when we invest, there&#39;s always some unknowns and risks to take, but for me here, there&#39;s just way too many unknowns, which makes it a very illogical investment.</p><h2 id=\"id_1452235947\">Background</h2><p>SMCI has been on a crazy ride throughout 2024, rising from $28 back in January all the way up to $115 in March, which equates to a 307% increase in 3 months.</p><p>It then dropped down to $18 by November 15th, erasing 85% of the total market cap. This drop came after Ernst &amp; Young (SMCI&#39;s auditor) resigned on October 24th. Ernst &amp; Young cited reasons including:</p><ul style=\"\"><li><p>Lack of trust in management</p></li><li><p>Weak internal controls</p></li><li><p>Lack of board independence</p></li></ul><p>When an auditor resigns from auditing a client the size of SMCI it&#39;s never a good sign. Auditors spend hours fighting to win over the biggest clients which allows them to rake in the huge audit fees, but when they deem the risk of being associated with a listed client to be far more negative than the huge audit fees they would receive, there&#39;s likely something out of the ordinary going on.</p><h2 id=\"id_146560957\">Here&#39;s why SMCI is not worth investing into.</h2><p>If this auditor resignation was a one-off issue, then I&#39;d be inclined to give SMCI the benefit of doubt (though I&#39;d still remain extremely cautious), but unfortunately this negativity around SMCI is not a one-off at all.</p><p>The past 6 years has seen:</p><ul style=\"\"><li><p>NASDAQ delisting</p></li><li><p>$17.5 million fine to SEC</p></li><li><p>Hindenburg Research (one of the most famous short sellers)</p></li><li><p>Department of Justice probe</p></li></ul><p>I&#39;m going to go over each one of these to explain exactly what&#39;s happened and my take on them all.</p><h3 id=\"id_2241418678\">NASDAQ delisting - 2018</h3><p>SMCI was temporarily delisted from the NASDAQ stock exchange in August 2018 due to failure to comply with NASDAQ timelines of financial reports. Companies get delisted for many reasons, however the 3 main reasons are:</p><ol start=\"1\" style=\"\"><li><p>Voluntary delisting.</p></li><li><p>Falling below a certain market cap or $1.00 stock price.</p></li><li><p>Accounting issues/missed deadlines.</p></li></ol><p>Reason 3 is exactly why SMCI got delisted, and it tends to be the least common and perhaps most serious due to the internal inefficiencies. NASDAQ generally does have fairly long &#34;grace periods&#34; meaning SMCI failed to comply with the extended NASDAQ deadlines, something which has not happened to a company of SMCI&#39;s size in a long time.</p><h3 id=\"id_37544222\">Fine</h3><p>In 2020, SMCI paid a $17.5 million fine to the SEC for accounting violations in which they neither admitted nor denied the SEC findings. The violations were due to incorrect revenue recognition, understating expenses, and other accounting violations over a period of 3 years.</p><p>Arguably a one-off instance like this would not cause too much panic, but the continuous nature of this raises skepticism.</p><h3 id=\"id_1199563137\">Department of Justice</h3><p>On top of all this negativity, SMCI has an ongoing DoJ (Department of Justice) probe which is looking into accounting violations. DoJ probes are a big deal and are likely to have an overarching effect on the SMCI stock price even if all of all the other unknowns start to become more clear.</p><p>As I mentioned before with the Hindenburg research, we have to take their report with a pinch of salt since they are a short-seller after all. However, an investigation by the DoJ is much more serious and anything that comes up in that investigation will materially affect SMCI&#39;s future.</p><h3 id=\"id_494708400\">BDO Appointment</h3><p>The positive news after all of this is that SMCI managed to appoint BDO (the 5th largest accounting firm) after all of the above incidents, which has to be a win because it gives them hope to at least restore investor confidence, and prepare some financial statements. That&#39;s all the good news I can say about this though.</p><p>The bad news is that BDO isn&#39;t a big 4 company that SMCI would have appointed. BDO also has had poor results over recent years in terms of audit quality. To put it simply, SMCI would not have wanted to appoint an auditor outside of the Big 4. It&#39;s a shame that this is the way it is, but for a company in the S&amp;P 500, Big 4 auditors are by far the most common. Unless there&#39;s a good reason not to appoint a Big 4 auditor, S&amp;P 500 companies simply look a bit more questionable if they don&#39;t have a Big 4 company auditing them.</p><p>The other important thing to note is that even though SMCI has appointed a BDO, initial screening or conversations with EY (previous auditor) have not occurred. This was all disclosed in the 8-K but obviously wasn&#39;t part of the headlines. Simply what is happening is that BDO are the only company to at least consider looking at the SMCI books in the hope that everything is ok, and therefore they potentially have one of the biggest clients on the books.</p><p>In my opinion, realistically, the issues that EY found won&#39;t have been resolved and BDO will also likely find these issues, meaning they&#39;ll not sign off.</p><p>Let me take this even further. A first year audit takes a long time. It includes getting a very solid understanding of the company, the internal controls, previous period&#39;s numbers etc., etc. In my opinion, the entire process likely cannot happen before February 2025, which is when NASDAQ has granted a filing extension until.</p><p>If the BDO does manage to get all this work done, and assuming there&#39;s no issues found (unlikely in my opinion), there is still a chance of secondary reviews by regulators.</p><h2 id=\"id_4231930187\">So is SMCI a buy, sell, or hold?</h2><p>SMCI has performed well the last 3 weeks post appointment of auditor, BDO, plus a short squeeze. Whilst the share price shows some potential signs of recovery, I hope this article made it clear exactly how much risk there still is.</p><p>SMCI still has to get BDO to audit their financials by February without any findings, a potential secondary review, and also get through the DoJ investigation to essentially survive. If any of these come back with material findings, I think there&#39;s a very good chance that SMCI gets delisted, which will, of course, have material consequences for all investors.</p><p>Of course, I may be wrong here, and I may be overly worried about the legitimacy of the financials, but when there&#39;s hundreds and if not thousands of other stocks without any risk of these issues, I don&#39;t see why it&#39;s worth risking an investment into SMCI.</p><p>My overall take is that I&#39;d give it a 50:50 chance as to whether SMCI recovers and, in my opinion, investing in them is much more gambling, rather than data driven, educated, smart investing.</p></body></html>","source":"lsy1728464409321","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Super Micro Computer: You're Gambling If You Buy This, Not Investing</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSuper Micro Computer: You're Gambling If You Buy This, Not Investing\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-04 11:45 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4741870-super-micro-computer-smci-gambling-if-you-buy-not-investing><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummarySMCI's recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.SMCI's past issues include NASDAQ delisting, SEC fines...</p>\n\n<a href=\"https://seekingalpha.com/article/4741870-super-micro-computer-smci-gambling-if-you-buy-not-investing\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SMCI":"超微电脑"},"source_url":"https://seekingalpha.com/article/4741870-super-micro-computer-smci-gambling-if-you-buy-not-investing","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1199304506","content_text":"SummarySMCI's recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.SMCI's past issues include NASDAQ delisting, SEC fines, which all raise serious concerns about its financial integrity.The appointment of BDO as the new auditor offers some hope but doesn't eliminate the significant risks and unresolved issues identified by Ernst & Young.Investing in SMCI now is more akin to gambling than smart investing due to the high level of unknowns and potential for severe negative outcomes.SlavkoSereda/iStock via Getty ImagesIntroductionI mostly like to talk about buying opportunities here on Seeking Alpha, but I've noted that a lot of people have been buying Super Micro Computer (NASDAQ:SMCI) recently, post the news that they appointed BDO as auditor.Despite this appointment having some potential good news and a sign of hope, there's way too many unknowns and risk factors that, as investors on the outside, we just don't know the answers to. Of course, when we invest, there's always some unknowns and risks to take, but for me here, there's just way too many unknowns, which makes it a very illogical investment.BackgroundSMCI has been on a crazy ride throughout 2024, rising from $28 back in January all the way up to $115 in March, which equates to a 307% increase in 3 months.It then dropped down to $18 by November 15th, erasing 85% of the total market cap. This drop came after Ernst & Young (SMCI's auditor) resigned on October 24th. Ernst & Young cited reasons including:Lack of trust in managementWeak internal controlsLack of board independenceWhen an auditor resigns from auditing a client the size of SMCI it's never a good sign. Auditors spend hours fighting to win over the biggest clients which allows them to rake in the huge audit fees, but when they deem the risk of being associated with a listed client to be far more negative than the huge audit fees they would receive, there's likely something out of the ordinary going on.Here's why SMCI is not worth investing into.If this auditor resignation was a one-off issue, then I'd be inclined to give SMCI the benefit of doubt (though I'd still remain extremely cautious), but unfortunately this negativity around SMCI is not a one-off at all.The past 6 years has seen:NASDAQ delisting$17.5 million fine to SECHindenburg Research (one of the most famous short sellers)Department of Justice probeI'm going to go over each one of these to explain exactly what's happened and my take on them all.NASDAQ delisting - 2018SMCI was temporarily delisted from the NASDAQ stock exchange in August 2018 due to failure to comply with NASDAQ timelines of financial reports. Companies get delisted for many reasons, however the 3 main reasons are:Voluntary delisting.Falling below a certain market cap or $1.00 stock price.Accounting issues/missed deadlines.Reason 3 is exactly why SMCI got delisted, and it tends to be the least common and perhaps most serious due to the internal inefficiencies. NASDAQ generally does have fairly long \"grace periods\" meaning SMCI failed to comply with the extended NASDAQ deadlines, something which has not happened to a company of SMCI's size in a long time.FineIn 2020, SMCI paid a $17.5 million fine to the SEC for accounting violations in which they neither admitted nor denied the SEC findings. The violations were due to incorrect revenue recognition, understating expenses, and other accounting violations over a period of 3 years.Arguably a one-off instance like this would not cause too much panic, but the continuous nature of this raises skepticism.Department of JusticeOn top of all this negativity, SMCI has an ongoing DoJ (Department of Justice) probe which is looking into accounting violations. DoJ probes are a big deal and are likely to have an overarching effect on the SMCI stock price even if all of all the other unknowns start to become more clear.As I mentioned before with the Hindenburg research, we have to take their report with a pinch of salt since they are a short-seller after all. However, an investigation by the DoJ is much more serious and anything that comes up in that investigation will materially affect SMCI's future.BDO AppointmentThe positive news after all of this is that SMCI managed to appoint BDO (the 5th largest accounting firm) after all of the above incidents, which has to be a win because it gives them hope to at least restore investor confidence, and prepare some financial statements. That's all the good news I can say about this though.The bad news is that BDO isn't a big 4 company that SMCI would have appointed. BDO also has had poor results over recent years in terms of audit quality. To put it simply, SMCI would not have wanted to appoint an auditor outside of the Big 4. It's a shame that this is the way it is, but for a company in the S&P 500, Big 4 auditors are by far the most common. Unless there's a good reason not to appoint a Big 4 auditor, S&P 500 companies simply look a bit more questionable if they don't have a Big 4 company auditing them.The other important thing to note is that even though SMCI has appointed a BDO, initial screening or conversations with EY (previous auditor) have not occurred. This was all disclosed in the 8-K but obviously wasn't part of the headlines. Simply what is happening is that BDO are the only company to at least consider looking at the SMCI books in the hope that everything is ok, and therefore they potentially have one of the biggest clients on the books.In my opinion, realistically, the issues that EY found won't have been resolved and BDO will also likely find these issues, meaning they'll not sign off.Let me take this even further. A first year audit takes a long time. It includes getting a very solid understanding of the company, the internal controls, previous period's numbers etc., etc. In my opinion, the entire process likely cannot happen before February 2025, which is when NASDAQ has granted a filing extension until.If the BDO does manage to get all this work done, and assuming there's no issues found (unlikely in my opinion), there is still a chance of secondary reviews by regulators.So is SMCI a buy, sell, or hold?SMCI has performed well the last 3 weeks post appointment of auditor, BDO, plus a short squeeze. Whilst the share price shows some potential signs of recovery, I hope this article made it clear exactly how much risk there still is.SMCI still has to get BDO to audit their financials by February without any findings, a potential secondary review, and also get through the DoJ investigation to essentially survive. If any of these come back with material findings, I think there's a very good chance that SMCI gets delisted, which will, of course, have material consequences for all investors.Of course, I may be wrong here, and I may be overly worried about the legitimacy of the financials, but when there's hundreds and if not thousands of other stocks without any risk of these issues, I don't see why it's worth risking an investment into SMCI.My overall take is that I'd give it a 50:50 chance as to whether SMCI recovers and, in my opinion, investing in them is much more gambling, rather than data driven, educated, smart investing.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":377939128107336,"gmtCreate":1733299904435,"gmtModify":1733300332164,"author":{"id":"4135033090247542","authorId":"4135033090247542","name":"9Jansen","avatar":"https://community-static.tradeup.com/news/5ae277b469146ef382ee229087ad3f74","vip":1,"hat":"https://static.tigerbbs.com/2b6219675842600ebb42baa43c645832","crmLevel":6,"crmLevelSwitch":0,"idStr":"4135033090247542","authorIdStr":"4135033090247542"},"htmlText":"Chill [Cool]&nbsp;&nbsp;","listText":"Chill [Cool]&nbsp;&nbsp;","text":"Chill [Cool]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/377939128107336","repostId":1199304506,"repostType":2,"repost":{"id":"1199304506","kind":"news","pubTimestamp":1733283900,"share":"https://ttm.financial/m/news/1199304506?lang=&edition=fundamental","pubTime":"2024-12-04 11:45","market":"us","language":"en","title":"Super Micro Computer: You're Gambling If You Buy This, Not Investing","url":"https://stock-news.laohu8.com/highlight/detail?id=1199304506","media":"Seeking Alpha","summary":"SummarySMCI's recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.SMCI's past issues include NASDAQ delisting, SEC fines","content":"<html><head></head><body><h2 id=\"id_2210350387\">Summary</h2><ul style=\"\"><li><p>SMCI&#39;s recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.</p></li><li><p>SMCI&#39;s past issues include NASDAQ delisting, SEC fines, which all raise serious concerns about its financial integrity.</p></li><li><p>The appointment of BDO as the new auditor offers some hope but doesn&#39;t eliminate the significant risks and unresolved issues identified by Ernst &amp; Young.</p></li><li><p>Investing in SMCI now is more akin to gambling than smart investing due to the high level of unknowns and potential for severe negative outcomes.</p></li></ul><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/d0dd59825e09cdca1d96afc5c7f9a0d1\" alt=\"SlavkoSereda/iStock via Getty Images\" title=\"SlavkoSereda/iStock via Getty Images\" tg-width=\"750\" tg-height=\"500\"/><span>SlavkoSereda/iStock via Getty Images</span></p><h2 id=\"id_2160079058\">Introduction</h2><p>I mostly like to talk about buying opportunities here on Seeking Alpha, but I&#39;ve noted that a lot of people have been buying Super Micro Computer (NASDAQ:SMCI) recently, post the news that they appointed BDO as auditor.</p><p>Despite this appointment having some potential good news and a sign of hope, there&#39;s way too many unknowns and risk factors that, as investors on the outside, we just don&#39;t know the answers to. Of course, when we invest, there&#39;s always some unknowns and risks to take, but for me here, there&#39;s just way too many unknowns, which makes it a very illogical investment.</p><h2 id=\"id_1452235947\">Background</h2><p>SMCI has been on a crazy ride throughout 2024, rising from $28 back in January all the way up to $115 in March, which equates to a 307% increase in 3 months.</p><p>It then dropped down to $18 by November 15th, erasing 85% of the total market cap. This drop came after Ernst &amp; Young (SMCI&#39;s auditor) resigned on October 24th. Ernst &amp; Young cited reasons including:</p><ul style=\"\"><li><p>Lack of trust in management</p></li><li><p>Weak internal controls</p></li><li><p>Lack of board independence</p></li></ul><p>When an auditor resigns from auditing a client the size of SMCI it&#39;s never a good sign. Auditors spend hours fighting to win over the biggest clients which allows them to rake in the huge audit fees, but when they deem the risk of being associated with a listed client to be far more negative than the huge audit fees they would receive, there&#39;s likely something out of the ordinary going on.</p><h2 id=\"id_146560957\">Here&#39;s why SMCI is not worth investing into.</h2><p>If this auditor resignation was a one-off issue, then I&#39;d be inclined to give SMCI the benefit of doubt (though I&#39;d still remain extremely cautious), but unfortunately this negativity around SMCI is not a one-off at all.</p><p>The past 6 years has seen:</p><ul style=\"\"><li><p>NASDAQ delisting</p></li><li><p>$17.5 million fine to SEC</p></li><li><p>Hindenburg Research (one of the most famous short sellers)</p></li><li><p>Department of Justice probe</p></li></ul><p>I&#39;m going to go over each one of these to explain exactly what&#39;s happened and my take on them all.</p><h3 id=\"id_2241418678\">NASDAQ delisting - 2018</h3><p>SMCI was temporarily delisted from the NASDAQ stock exchange in August 2018 due to failure to comply with NASDAQ timelines of financial reports. Companies get delisted for many reasons, however the 3 main reasons are:</p><ol start=\"1\" style=\"\"><li><p>Voluntary delisting.</p></li><li><p>Falling below a certain market cap or $1.00 stock price.</p></li><li><p>Accounting issues/missed deadlines.</p></li></ol><p>Reason 3 is exactly why SMCI got delisted, and it tends to be the least common and perhaps most serious due to the internal inefficiencies. NASDAQ generally does have fairly long &#34;grace periods&#34; meaning SMCI failed to comply with the extended NASDAQ deadlines, something which has not happened to a company of SMCI&#39;s size in a long time.</p><h3 id=\"id_37544222\">Fine</h3><p>In 2020, SMCI paid a $17.5 million fine to the SEC for accounting violations in which they neither admitted nor denied the SEC findings. The violations were due to incorrect revenue recognition, understating expenses, and other accounting violations over a period of 3 years.</p><p>Arguably a one-off instance like this would not cause too much panic, but the continuous nature of this raises skepticism.</p><h3 id=\"id_1199563137\">Department of Justice</h3><p>On top of all this negativity, SMCI has an ongoing DoJ (Department of Justice) probe which is looking into accounting violations. DoJ probes are a big deal and are likely to have an overarching effect on the SMCI stock price even if all of all the other unknowns start to become more clear.</p><p>As I mentioned before with the Hindenburg research, we have to take their report with a pinch of salt since they are a short-seller after all. However, an investigation by the DoJ is much more serious and anything that comes up in that investigation will materially affect SMCI&#39;s future.</p><h3 id=\"id_494708400\">BDO Appointment</h3><p>The positive news after all of this is that SMCI managed to appoint BDO (the 5th largest accounting firm) after all of the above incidents, which has to be a win because it gives them hope to at least restore investor confidence, and prepare some financial statements. That&#39;s all the good news I can say about this though.</p><p>The bad news is that BDO isn&#39;t a big 4 company that SMCI would have appointed. BDO also has had poor results over recent years in terms of audit quality. To put it simply, SMCI would not have wanted to appoint an auditor outside of the Big 4. It&#39;s a shame that this is the way it is, but for a company in the S&amp;P 500, Big 4 auditors are by far the most common. Unless there&#39;s a good reason not to appoint a Big 4 auditor, S&amp;P 500 companies simply look a bit more questionable if they don&#39;t have a Big 4 company auditing them.</p><p>The other important thing to note is that even though SMCI has appointed a BDO, initial screening or conversations with EY (previous auditor) have not occurred. This was all disclosed in the 8-K but obviously wasn&#39;t part of the headlines. Simply what is happening is that BDO are the only company to at least consider looking at the SMCI books in the hope that everything is ok, and therefore they potentially have one of the biggest clients on the books.</p><p>In my opinion, realistically, the issues that EY found won&#39;t have been resolved and BDO will also likely find these issues, meaning they&#39;ll not sign off.</p><p>Let me take this even further. A first year audit takes a long time. It includes getting a very solid understanding of the company, the internal controls, previous period&#39;s numbers etc., etc. In my opinion, the entire process likely cannot happen before February 2025, which is when NASDAQ has granted a filing extension until.</p><p>If the BDO does manage to get all this work done, and assuming there&#39;s no issues found (unlikely in my opinion), there is still a chance of secondary reviews by regulators.</p><h2 id=\"id_4231930187\">So is SMCI a buy, sell, or hold?</h2><p>SMCI has performed well the last 3 weeks post appointment of auditor, BDO, plus a short squeeze. Whilst the share price shows some potential signs of recovery, I hope this article made it clear exactly how much risk there still is.</p><p>SMCI still has to get BDO to audit their financials by February without any findings, a potential secondary review, and also get through the DoJ investigation to essentially survive. If any of these come back with material findings, I think there&#39;s a very good chance that SMCI gets delisted, which will, of course, have material consequences for all investors.</p><p>Of course, I may be wrong here, and I may be overly worried about the legitimacy of the financials, but when there&#39;s hundreds and if not thousands of other stocks without any risk of these issues, I don&#39;t see why it&#39;s worth risking an investment into SMCI.</p><p>My overall take is that I&#39;d give it a 50:50 chance as to whether SMCI recovers and, in my opinion, investing in them is much more gambling, rather than data driven, educated, smart investing.</p></body></html>","source":"lsy1728464409321","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Super Micro Computer: You're Gambling If You Buy This, Not Investing</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSuper Micro Computer: You're Gambling If You Buy This, Not Investing\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-04 11:45 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4741870-super-micro-computer-smci-gambling-if-you-buy-not-investing><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummarySMCI's recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.SMCI's past issues include NASDAQ delisting, SEC fines...</p>\n\n<a href=\"https://seekingalpha.com/article/4741870-super-micro-computer-smci-gambling-if-you-buy-not-investing\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SMCI":"超微电脑"},"source_url":"https://seekingalpha.com/article/4741870-super-micro-computer-smci-gambling-if-you-buy-not-investing","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1199304506","content_text":"SummarySMCI's recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.SMCI's past issues include NASDAQ delisting, SEC fines, which all raise serious concerns about its financial integrity.The appointment of BDO as the new auditor offers some hope but doesn't eliminate the significant risks and unresolved issues identified by Ernst & Young.Investing in SMCI now is more akin to gambling than smart investing due to the high level of unknowns and potential for severe negative outcomes.SlavkoSereda/iStock via Getty ImagesIntroductionI mostly like to talk about buying opportunities here on Seeking Alpha, but I've noted that a lot of people have been buying Super Micro Computer (NASDAQ:SMCI) recently, post the news that they appointed BDO as auditor.Despite this appointment having some potential good news and a sign of hope, there's way too many unknowns and risk factors that, as investors on the outside, we just don't know the answers to. Of course, when we invest, there's always some unknowns and risks to take, but for me here, there's just way too many unknowns, which makes it a very illogical investment.BackgroundSMCI has been on a crazy ride throughout 2024, rising from $28 back in January all the way up to $115 in March, which equates to a 307% increase in 3 months.It then dropped down to $18 by November 15th, erasing 85% of the total market cap. This drop came after Ernst & Young (SMCI's auditor) resigned on October 24th. Ernst & Young cited reasons including:Lack of trust in managementWeak internal controlsLack of board independenceWhen an auditor resigns from auditing a client the size of SMCI it's never a good sign. Auditors spend hours fighting to win over the biggest clients which allows them to rake in the huge audit fees, but when they deem the risk of being associated with a listed client to be far more negative than the huge audit fees they would receive, there's likely something out of the ordinary going on.Here's why SMCI is not worth investing into.If this auditor resignation was a one-off issue, then I'd be inclined to give SMCI the benefit of doubt (though I'd still remain extremely cautious), but unfortunately this negativity around SMCI is not a one-off at all.The past 6 years has seen:NASDAQ delisting$17.5 million fine to SECHindenburg Research (one of the most famous short sellers)Department of Justice probeI'm going to go over each one of these to explain exactly what's happened and my take on them all.NASDAQ delisting - 2018SMCI was temporarily delisted from the NASDAQ stock exchange in August 2018 due to failure to comply with NASDAQ timelines of financial reports. Companies get delisted for many reasons, however the 3 main reasons are:Voluntary delisting.Falling below a certain market cap or $1.00 stock price.Accounting issues/missed deadlines.Reason 3 is exactly why SMCI got delisted, and it tends to be the least common and perhaps most serious due to the internal inefficiencies. NASDAQ generally does have fairly long \"grace periods\" meaning SMCI failed to comply with the extended NASDAQ deadlines, something which has not happened to a company of SMCI's size in a long time.FineIn 2020, SMCI paid a $17.5 million fine to the SEC for accounting violations in which they neither admitted nor denied the SEC findings. The violations were due to incorrect revenue recognition, understating expenses, and other accounting violations over a period of 3 years.Arguably a one-off instance like this would not cause too much panic, but the continuous nature of this raises skepticism.Department of JusticeOn top of all this negativity, SMCI has an ongoing DoJ (Department of Justice) probe which is looking into accounting violations. DoJ probes are a big deal and are likely to have an overarching effect on the SMCI stock price even if all of all the other unknowns start to become more clear.As I mentioned before with the Hindenburg research, we have to take their report with a pinch of salt since they are a short-seller after all. However, an investigation by the DoJ is much more serious and anything that comes up in that investigation will materially affect SMCI's future.BDO AppointmentThe positive news after all of this is that SMCI managed to appoint BDO (the 5th largest accounting firm) after all of the above incidents, which has to be a win because it gives them hope to at least restore investor confidence, and prepare some financial statements. That's all the good news I can say about this though.The bad news is that BDO isn't a big 4 company that SMCI would have appointed. BDO also has had poor results over recent years in terms of audit quality. To put it simply, SMCI would not have wanted to appoint an auditor outside of the Big 4. It's a shame that this is the way it is, but for a company in the S&P 500, Big 4 auditors are by far the most common. Unless there's a good reason not to appoint a Big 4 auditor, S&P 500 companies simply look a bit more questionable if they don't have a Big 4 company auditing them.The other important thing to note is that even though SMCI has appointed a BDO, initial screening or conversations with EY (previous auditor) have not occurred. This was all disclosed in the 8-K but obviously wasn't part of the headlines. Simply what is happening is that BDO are the only company to at least consider looking at the SMCI books in the hope that everything is ok, and therefore they potentially have one of the biggest clients on the books.In my opinion, realistically, the issues that EY found won't have been resolved and BDO will also likely find these issues, meaning they'll not sign off.Let me take this even further. A first year audit takes a long time. It includes getting a very solid understanding of the company, the internal controls, previous period's numbers etc., etc. In my opinion, the entire process likely cannot happen before February 2025, which is when NASDAQ has granted a filing extension until.If the BDO does manage to get all this work done, and assuming there's no issues found (unlikely in my opinion), there is still a chance of secondary reviews by regulators.So is SMCI a buy, sell, or hold?SMCI has performed well the last 3 weeks post appointment of auditor, BDO, plus a short squeeze. Whilst the share price shows some potential signs of recovery, I hope this article made it clear exactly how much risk there still is.SMCI still has to get BDO to audit their financials by February without any findings, a potential secondary review, and also get through the DoJ investigation to essentially survive. If any of these come back with material findings, I think there's a very good chance that SMCI gets delisted, which will, of course, have material consequences for all investors.Of course, I may be wrong here, and I may be overly worried about the legitimacy of the financials, but when there's hundreds and if not thousands of other stocks without any risk of these issues, I don't see why it's worth risking an investment into SMCI.My overall take is that I'd give it a 50:50 chance as to whether SMCI recovers and, in my opinion, investing in them is much more gambling, rather than data driven, educated, smart investing.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":377908085366928,"gmtCreate":1733292241335,"gmtModify":1733292907482,"author":{"id":"4171803256903022","authorId":"4171803256903022","name":"WealthBuilder","avatar":"https://community-static.tradeup.com/news/c38f4668f8134a2f2f17efffb35d19b4","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"4171803256903022","authorIdStr":"4171803256903022"},"htmlText":"He has lost his underwear shorting SMCI , writing article to try recovering what he has lost","listText":"He has lost his underwear shorting SMCI , writing article to try recovering what he has lost","text":"He has lost his underwear shorting SMCI , writing article to try recovering what he has lost","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":6,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/377908085366928","repostId":1199304506,"repostType":4,"repost":{"id":"1199304506","kind":"news","pubTimestamp":1733283900,"share":"https://ttm.financial/m/news/1199304506?lang=&edition=fundamental","pubTime":"2024-12-04 11:45","market":"us","language":"en","title":"Super Micro Computer: You're Gambling If You Buy This, Not Investing","url":"https://stock-news.laohu8.com/highlight/detail?id=1199304506","media":"Seeking Alpha","summary":"SummarySMCI's recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.SMCI's past issues include NASDAQ delisting, SEC fines","content":"<html><head></head><body><h2 id=\"id_2210350387\">Summary</h2><ul style=\"\"><li><p>SMCI&#39;s recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.</p></li><li><p>SMCI&#39;s past issues include NASDAQ delisting, SEC fines, which all raise serious concerns about its financial integrity.</p></li><li><p>The appointment of BDO as the new auditor offers some hope but doesn&#39;t eliminate the significant risks and unresolved issues identified by Ernst &amp; Young.</p></li><li><p>Investing in SMCI now is more akin to gambling than smart investing due to the high level of unknowns and potential for severe negative outcomes.</p></li></ul><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/d0dd59825e09cdca1d96afc5c7f9a0d1\" alt=\"SlavkoSereda/iStock via Getty Images\" title=\"SlavkoSereda/iStock via Getty Images\" tg-width=\"750\" tg-height=\"500\"/><span>SlavkoSereda/iStock via Getty Images</span></p><h2 id=\"id_2160079058\">Introduction</h2><p>I mostly like to talk about buying opportunities here on Seeking Alpha, but I&#39;ve noted that a lot of people have been buying Super Micro Computer (NASDAQ:SMCI) recently, post the news that they appointed BDO as auditor.</p><p>Despite this appointment having some potential good news and a sign of hope, there&#39;s way too many unknowns and risk factors that, as investors on the outside, we just don&#39;t know the answers to. Of course, when we invest, there&#39;s always some unknowns and risks to take, but for me here, there&#39;s just way too many unknowns, which makes it a very illogical investment.</p><h2 id=\"id_1452235947\">Background</h2><p>SMCI has been on a crazy ride throughout 2024, rising from $28 back in January all the way up to $115 in March, which equates to a 307% increase in 3 months.</p><p>It then dropped down to $18 by November 15th, erasing 85% of the total market cap. This drop came after Ernst &amp; Young (SMCI&#39;s auditor) resigned on October 24th. Ernst &amp; Young cited reasons including:</p><ul style=\"\"><li><p>Lack of trust in management</p></li><li><p>Weak internal controls</p></li><li><p>Lack of board independence</p></li></ul><p>When an auditor resigns from auditing a client the size of SMCI it&#39;s never a good sign. Auditors spend hours fighting to win over the biggest clients which allows them to rake in the huge audit fees, but when they deem the risk of being associated with a listed client to be far more negative than the huge audit fees they would receive, there&#39;s likely something out of the ordinary going on.</p><h2 id=\"id_146560957\">Here&#39;s why SMCI is not worth investing into.</h2><p>If this auditor resignation was a one-off issue, then I&#39;d be inclined to give SMCI the benefit of doubt (though I&#39;d still remain extremely cautious), but unfortunately this negativity around SMCI is not a one-off at all.</p><p>The past 6 years has seen:</p><ul style=\"\"><li><p>NASDAQ delisting</p></li><li><p>$17.5 million fine to SEC</p></li><li><p>Hindenburg Research (one of the most famous short sellers)</p></li><li><p>Department of Justice probe</p></li></ul><p>I&#39;m going to go over each one of these to explain exactly what&#39;s happened and my take on them all.</p><h3 id=\"id_2241418678\">NASDAQ delisting - 2018</h3><p>SMCI was temporarily delisted from the NASDAQ stock exchange in August 2018 due to failure to comply with NASDAQ timelines of financial reports. Companies get delisted for many reasons, however the 3 main reasons are:</p><ol start=\"1\" style=\"\"><li><p>Voluntary delisting.</p></li><li><p>Falling below a certain market cap or $1.00 stock price.</p></li><li><p>Accounting issues/missed deadlines.</p></li></ol><p>Reason 3 is exactly why SMCI got delisted, and it tends to be the least common and perhaps most serious due to the internal inefficiencies. NASDAQ generally does have fairly long &#34;grace periods&#34; meaning SMCI failed to comply with the extended NASDAQ deadlines, something which has not happened to a company of SMCI&#39;s size in a long time.</p><h3 id=\"id_37544222\">Fine</h3><p>In 2020, SMCI paid a $17.5 million fine to the SEC for accounting violations in which they neither admitted nor denied the SEC findings. The violations were due to incorrect revenue recognition, understating expenses, and other accounting violations over a period of 3 years.</p><p>Arguably a one-off instance like this would not cause too much panic, but the continuous nature of this raises skepticism.</p><h3 id=\"id_1199563137\">Department of Justice</h3><p>On top of all this negativity, SMCI has an ongoing DoJ (Department of Justice) probe which is looking into accounting violations. DoJ probes are a big deal and are likely to have an overarching effect on the SMCI stock price even if all of all the other unknowns start to become more clear.</p><p>As I mentioned before with the Hindenburg research, we have to take their report with a pinch of salt since they are a short-seller after all. However, an investigation by the DoJ is much more serious and anything that comes up in that investigation will materially affect SMCI&#39;s future.</p><h3 id=\"id_494708400\">BDO Appointment</h3><p>The positive news after all of this is that SMCI managed to appoint BDO (the 5th largest accounting firm) after all of the above incidents, which has to be a win because it gives them hope to at least restore investor confidence, and prepare some financial statements. That&#39;s all the good news I can say about this though.</p><p>The bad news is that BDO isn&#39;t a big 4 company that SMCI would have appointed. BDO also has had poor results over recent years in terms of audit quality. To put it simply, SMCI would not have wanted to appoint an auditor outside of the Big 4. It&#39;s a shame that this is the way it is, but for a company in the S&amp;P 500, Big 4 auditors are by far the most common. Unless there&#39;s a good reason not to appoint a Big 4 auditor, S&amp;P 500 companies simply look a bit more questionable if they don&#39;t have a Big 4 company auditing them.</p><p>The other important thing to note is that even though SMCI has appointed a BDO, initial screening or conversations with EY (previous auditor) have not occurred. This was all disclosed in the 8-K but obviously wasn&#39;t part of the headlines. Simply what is happening is that BDO are the only company to at least consider looking at the SMCI books in the hope that everything is ok, and therefore they potentially have one of the biggest clients on the books.</p><p>In my opinion, realistically, the issues that EY found won&#39;t have been resolved and BDO will also likely find these issues, meaning they&#39;ll not sign off.</p><p>Let me take this even further. A first year audit takes a long time. It includes getting a very solid understanding of the company, the internal controls, previous period&#39;s numbers etc., etc. In my opinion, the entire process likely cannot happen before February 2025, which is when NASDAQ has granted a filing extension until.</p><p>If the BDO does manage to get all this work done, and assuming there&#39;s no issues found (unlikely in my opinion), there is still a chance of secondary reviews by regulators.</p><h2 id=\"id_4231930187\">So is SMCI a buy, sell, or hold?</h2><p>SMCI has performed well the last 3 weeks post appointment of auditor, BDO, plus a short squeeze. Whilst the share price shows some potential signs of recovery, I hope this article made it clear exactly how much risk there still is.</p><p>SMCI still has to get BDO to audit their financials by February without any findings, a potential secondary review, and also get through the DoJ investigation to essentially survive. If any of these come back with material findings, I think there&#39;s a very good chance that SMCI gets delisted, which will, of course, have material consequences for all investors.</p><p>Of course, I may be wrong here, and I may be overly worried about the legitimacy of the financials, but when there&#39;s hundreds and if not thousands of other stocks without any risk of these issues, I don&#39;t see why it&#39;s worth risking an investment into SMCI.</p><p>My overall take is that I&#39;d give it a 50:50 chance as to whether SMCI recovers and, in my opinion, investing in them is much more gambling, rather than data driven, educated, smart investing.</p></body></html>","source":"lsy1728464409321","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Super Micro Computer: You're Gambling If You Buy This, Not Investing</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSuper Micro Computer: You're Gambling If You Buy This, Not Investing\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-04 11:45 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4741870-super-micro-computer-smci-gambling-if-you-buy-not-investing><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummarySMCI's recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.SMCI's past issues include NASDAQ delisting, SEC fines...</p>\n\n<a href=\"https://seekingalpha.com/article/4741870-super-micro-computer-smci-gambling-if-you-buy-not-investing\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SMCI":"超微电脑"},"source_url":"https://seekingalpha.com/article/4741870-super-micro-computer-smci-gambling-if-you-buy-not-investing","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1199304506","content_text":"SummarySMCI's recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.SMCI's past issues include NASDAQ delisting, SEC fines, which all raise serious concerns about its financial integrity.The appointment of BDO as the new auditor offers some hope but doesn't eliminate the significant risks and unresolved issues identified by Ernst & Young.Investing in SMCI now is more akin to gambling than smart investing due to the high level of unknowns and potential for severe negative outcomes.SlavkoSereda/iStock via Getty ImagesIntroductionI mostly like to talk about buying opportunities here on Seeking Alpha, but I've noted that a lot of people have been buying Super Micro Computer (NASDAQ:SMCI) recently, post the news that they appointed BDO as auditor.Despite this appointment having some potential good news and a sign of hope, there's way too many unknowns and risk factors that, as investors on the outside, we just don't know the answers to. Of course, when we invest, there's always some unknowns and risks to take, but for me here, there's just way too many unknowns, which makes it a very illogical investment.BackgroundSMCI has been on a crazy ride throughout 2024, rising from $28 back in January all the way up to $115 in March, which equates to a 307% increase in 3 months.It then dropped down to $18 by November 15th, erasing 85% of the total market cap. This drop came after Ernst & Young (SMCI's auditor) resigned on October 24th. Ernst & Young cited reasons including:Lack of trust in managementWeak internal controlsLack of board independenceWhen an auditor resigns from auditing a client the size of SMCI it's never a good sign. Auditors spend hours fighting to win over the biggest clients which allows them to rake in the huge audit fees, but when they deem the risk of being associated with a listed client to be far more negative than the huge audit fees they would receive, there's likely something out of the ordinary going on.Here's why SMCI is not worth investing into.If this auditor resignation was a one-off issue, then I'd be inclined to give SMCI the benefit of doubt (though I'd still remain extremely cautious), but unfortunately this negativity around SMCI is not a one-off at all.The past 6 years has seen:NASDAQ delisting$17.5 million fine to SECHindenburg Research (one of the most famous short sellers)Department of Justice probeI'm going to go over each one of these to explain exactly what's happened and my take on them all.NASDAQ delisting - 2018SMCI was temporarily delisted from the NASDAQ stock exchange in August 2018 due to failure to comply with NASDAQ timelines of financial reports. Companies get delisted for many reasons, however the 3 main reasons are:Voluntary delisting.Falling below a certain market cap or $1.00 stock price.Accounting issues/missed deadlines.Reason 3 is exactly why SMCI got delisted, and it tends to be the least common and perhaps most serious due to the internal inefficiencies. NASDAQ generally does have fairly long \"grace periods\" meaning SMCI failed to comply with the extended NASDAQ deadlines, something which has not happened to a company of SMCI's size in a long time.FineIn 2020, SMCI paid a $17.5 million fine to the SEC for accounting violations in which they neither admitted nor denied the SEC findings. The violations were due to incorrect revenue recognition, understating expenses, and other accounting violations over a period of 3 years.Arguably a one-off instance like this would not cause too much panic, but the continuous nature of this raises skepticism.Department of JusticeOn top of all this negativity, SMCI has an ongoing DoJ (Department of Justice) probe which is looking into accounting violations. DoJ probes are a big deal and are likely to have an overarching effect on the SMCI stock price even if all of all the other unknowns start to become more clear.As I mentioned before with the Hindenburg research, we have to take their report with a pinch of salt since they are a short-seller after all. However, an investigation by the DoJ is much more serious and anything that comes up in that investigation will materially affect SMCI's future.BDO AppointmentThe positive news after all of this is that SMCI managed to appoint BDO (the 5th largest accounting firm) after all of the above incidents, which has to be a win because it gives them hope to at least restore investor confidence, and prepare some financial statements. That's all the good news I can say about this though.The bad news is that BDO isn't a big 4 company that SMCI would have appointed. BDO also has had poor results over recent years in terms of audit quality. To put it simply, SMCI would not have wanted to appoint an auditor outside of the Big 4. It's a shame that this is the way it is, but for a company in the S&P 500, Big 4 auditors are by far the most common. Unless there's a good reason not to appoint a Big 4 auditor, S&P 500 companies simply look a bit more questionable if they don't have a Big 4 company auditing them.The other important thing to note is that even though SMCI has appointed a BDO, initial screening or conversations with EY (previous auditor) have not occurred. This was all disclosed in the 8-K but obviously wasn't part of the headlines. Simply what is happening is that BDO are the only company to at least consider looking at the SMCI books in the hope that everything is ok, and therefore they potentially have one of the biggest clients on the books.In my opinion, realistically, the issues that EY found won't have been resolved and BDO will also likely find these issues, meaning they'll not sign off.Let me take this even further. A first year audit takes a long time. It includes getting a very solid understanding of the company, the internal controls, previous period's numbers etc., etc. In my opinion, the entire process likely cannot happen before February 2025, which is when NASDAQ has granted a filing extension until.If the BDO does manage to get all this work done, and assuming there's no issues found (unlikely in my opinion), there is still a chance of secondary reviews by regulators.So is SMCI a buy, sell, or hold?SMCI has performed well the last 3 weeks post appointment of auditor, BDO, plus a short squeeze. Whilst the share price shows some potential signs of recovery, I hope this article made it clear exactly how much risk there still is.SMCI still has to get BDO to audit their financials by February without any findings, a potential secondary review, and also get through the DoJ investigation to essentially survive. If any of these come back with material findings, I think there's a very good chance that SMCI gets delisted, which will, of course, have material consequences for all investors.Of course, I may be wrong here, and I may be overly worried about the legitimacy of the financials, but when there's hundreds and if not thousands of other stocks without any risk of these issues, I don't see why it's worth risking an investment into SMCI.My overall take is that I'd give it a 50:50 chance as to whether SMCI recovers and, in my opinion, investing in them is much more gambling, rather than data driven, educated, smart investing.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":377924863275104,"gmtCreate":1733296436722,"gmtModify":1733296441545,"authorId":4175587157312792,"author":{"id":4175587157312792,"idStr":"4175587157312792","authorId":4175587157312792,"name":"RUW","avatar":"https://community-static.tradeup.com/news/default-avatar.jpg","vip":1,"currentWearingBadge":{"badgeId":"972123088c9646f7b6091ae0662215be-3","templateUuid":"972123088c9646f7b6091ae0662215be","name":"Legendary Trader","description":"Total number of securities or futures transactions reached 300","bigImgUrl":"https://static.tigerbbs.com/656db16598a0b8f21429e10d6c1cb033","smallImgUrl":"https://static.tigerbbs.com/03f10910d4dd9234f9b5702a3342193a","grayImgUrl":"https://static.tigerbbs.com/0c767e35268feb729d50d3fa9a386c5a","redirectLinkEnabled":0,"hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2024.10.27","exceedPercentage":"93.99%","individualDisplayEnabled":0,"individualDisplaySort":0,"categoryType":1100},"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[{"badgeId":"9427a906234c4b18a82ec3d7730b7fa8-1","templateUuid":"9427a906234c4b18a82ec3d7730b7fa8","name":"Star Contributor","description":"Have published 3 or more picked posts, and have published at least one picked post and participated in comments within 30 days","bigImgUrl":"https://community-static.tradeup.com/news/1866dcf97a73be1c330f85862546aedc","smallImgUrl":"https://community-static.tradeup.com/news/4f5c5fa8e2c7683bb5a7fce8753ee456","redirectLinkEnabled":1,"redirectLink":"https://ttm.financial/activity/market/2023/star-contributors/","hasAllocated":1,"isWearing":0,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2024.12.18","individualDisplayEnabled":1,"backgroundColor":{"dark":"#675a37","tint":"#f9ebc2"},"fontColor":{"dark":"#ffffff","tint":"#ab7a0e"},"individualDisplaySort":0,"categoryType":2007}]},"repliedAuthorId":0,"objectId":377908085366928,"type":1,"supId":0,"prevId":0,"content":"[Happy]","text":"[Happy]","html":"[Happy]"}],"langContent":"EN"},{"id":377840219537768,"gmtCreate":1733282761702,"gmtModify":1733481991333,"author":{"id":"3581983480536047","authorId":"3581983480536047","name":"bluekiwiseed","avatar":"https://community-static.tradeup.com/news/b09eaefc35a09fef64d138dc9e585465","vip":1,"hat":"https://static.tigerbbs.com/ae1f49570794979e009a5efdeb6f4789","crmLevel":7,"crmLevelSwitch":0,"idStr":"3581983480536047","authorIdStr":"3581983480536047"},"htmlText":"Another of those news seeking to encourage people to short sell SMCI because you missed the swing highs.&nbsp; I have already discussed this in my other post, but I cannot mention further that perceptions, not reality, shape the downfall of SMCI. You're basing your argument on the reputation and accusation&nbsp;of some companies, without actually knowing the inner workings of SMCI.&nbsp; SMCI's downfall represents the classic case of overperforming and provoking certain big shots. But the narrative created by these big shots are losing ground; even JP Morgan has a cautious but rather optimistic outlook on SMCI now. Whether BDO is part of the Big Four or not has no meaning. As JP Morgan states, only two things matter now: whether BDO will recognise the special committee's report (no account","listText":"Another of those news seeking to encourage people to short sell SMCI because you missed the swing highs.&nbsp; I have already discussed this in my other post, but I cannot mention further that perceptions, not reality, shape the downfall of SMCI. You're basing your argument on the reputation and accusation&nbsp;of some companies, without actually knowing the inner workings of SMCI.&nbsp; SMCI's downfall represents the classic case of overperforming and provoking certain big shots. But the narrative created by these big shots are losing ground; even JP Morgan has a cautious but rather optimistic outlook on SMCI now. Whether BDO is part of the Big Four or not has no meaning. As JP Morgan states, only two things matter now: whether BDO will recognise the special committee's report (no account","text":"Another of those news seeking to encourage people to short sell SMCI because you missed the swing highs. I have already discussed this in my other post, but I cannot mention further that perceptions, not reality, shape the downfall of SMCI. You're basing your argument on the reputation and accusation of some companies, without actually knowing the inner workings of SMCI. SMCI's downfall represents the classic case of overperforming and provoking certain big shots. But the narrative created by these big shots are losing ground; even JP Morgan has a cautious but rather optimistic outlook on SMCI now. Whether BDO is part of the Big Four or not has no meaning. As JP Morgan states, only two things matter now: whether BDO will recognise the special committee's report (no account","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":41,"commentSize":1,"repostSize":1,"link":"https://ttm.financial/post/377840219537768","repostId":1199304506,"repostType":2,"repost":{"id":"1199304506","kind":"news","pubTimestamp":1733283900,"share":"https://ttm.financial/m/news/1199304506?lang=&edition=fundamental","pubTime":"2024-12-04 11:45","market":"us","language":"en","title":"Super Micro Computer: You're Gambling If You Buy This, Not Investing","url":"https://stock-news.laohu8.com/highlight/detail?id=1199304506","media":"Seeking Alpha","summary":"SummarySMCI's recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.SMCI's past issues include NASDAQ delisting, SEC fines","content":"<html><head></head><body><h2 id=\"id_2210350387\">Summary</h2><ul style=\"\"><li><p>SMCI&#39;s recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.</p></li><li><p>SMCI&#39;s past issues include NASDAQ delisting, SEC fines, which all raise serious concerns about its financial integrity.</p></li><li><p>The appointment of BDO as the new auditor offers some hope but doesn&#39;t eliminate the significant risks and unresolved issues identified by Ernst &amp; Young.</p></li><li><p>Investing in SMCI now is more akin to gambling than smart investing due to the high level of unknowns and potential for severe negative outcomes.</p></li></ul><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/d0dd59825e09cdca1d96afc5c7f9a0d1\" alt=\"SlavkoSereda/iStock via Getty Images\" title=\"SlavkoSereda/iStock via Getty Images\" tg-width=\"750\" tg-height=\"500\"/><span>SlavkoSereda/iStock via Getty Images</span></p><h2 id=\"id_2160079058\">Introduction</h2><p>I mostly like to talk about buying opportunities here on Seeking Alpha, but I&#39;ve noted that a lot of people have been buying Super Micro Computer (NASDAQ:SMCI) recently, post the news that they appointed BDO as auditor.</p><p>Despite this appointment having some potential good news and a sign of hope, there&#39;s way too many unknowns and risk factors that, as investors on the outside, we just don&#39;t know the answers to. Of course, when we invest, there&#39;s always some unknowns and risks to take, but for me here, there&#39;s just way too many unknowns, which makes it a very illogical investment.</p><h2 id=\"id_1452235947\">Background</h2><p>SMCI has been on a crazy ride throughout 2024, rising from $28 back in January all the way up to $115 in March, which equates to a 307% increase in 3 months.</p><p>It then dropped down to $18 by November 15th, erasing 85% of the total market cap. This drop came after Ernst &amp; Young (SMCI&#39;s auditor) resigned on October 24th. Ernst &amp; Young cited reasons including:</p><ul style=\"\"><li><p>Lack of trust in management</p></li><li><p>Weak internal controls</p></li><li><p>Lack of board independence</p></li></ul><p>When an auditor resigns from auditing a client the size of SMCI it&#39;s never a good sign. Auditors spend hours fighting to win over the biggest clients which allows them to rake in the huge audit fees, but when they deem the risk of being associated with a listed client to be far more negative than the huge audit fees they would receive, there&#39;s likely something out of the ordinary going on.</p><h2 id=\"id_146560957\">Here&#39;s why SMCI is not worth investing into.</h2><p>If this auditor resignation was a one-off issue, then I&#39;d be inclined to give SMCI the benefit of doubt (though I&#39;d still remain extremely cautious), but unfortunately this negativity around SMCI is not a one-off at all.</p><p>The past 6 years has seen:</p><ul style=\"\"><li><p>NASDAQ delisting</p></li><li><p>$17.5 million fine to SEC</p></li><li><p>Hindenburg Research (one of the most famous short sellers)</p></li><li><p>Department of Justice probe</p></li></ul><p>I&#39;m going to go over each one of these to explain exactly what&#39;s happened and my take on them all.</p><h3 id=\"id_2241418678\">NASDAQ delisting - 2018</h3><p>SMCI was temporarily delisted from the NASDAQ stock exchange in August 2018 due to failure to comply with NASDAQ timelines of financial reports. Companies get delisted for many reasons, however the 3 main reasons are:</p><ol start=\"1\" style=\"\"><li><p>Voluntary delisting.</p></li><li><p>Falling below a certain market cap or $1.00 stock price.</p></li><li><p>Accounting issues/missed deadlines.</p></li></ol><p>Reason 3 is exactly why SMCI got delisted, and it tends to be the least common and perhaps most serious due to the internal inefficiencies. NASDAQ generally does have fairly long &#34;grace periods&#34; meaning SMCI failed to comply with the extended NASDAQ deadlines, something which has not happened to a company of SMCI&#39;s size in a long time.</p><h3 id=\"id_37544222\">Fine</h3><p>In 2020, SMCI paid a $17.5 million fine to the SEC for accounting violations in which they neither admitted nor denied the SEC findings. The violations were due to incorrect revenue recognition, understating expenses, and other accounting violations over a period of 3 years.</p><p>Arguably a one-off instance like this would not cause too much panic, but the continuous nature of this raises skepticism.</p><h3 id=\"id_1199563137\">Department of Justice</h3><p>On top of all this negativity, SMCI has an ongoing DoJ (Department of Justice) probe which is looking into accounting violations. DoJ probes are a big deal and are likely to have an overarching effect on the SMCI stock price even if all of all the other unknowns start to become more clear.</p><p>As I mentioned before with the Hindenburg research, we have to take their report with a pinch of salt since they are a short-seller after all. However, an investigation by the DoJ is much more serious and anything that comes up in that investigation will materially affect SMCI&#39;s future.</p><h3 id=\"id_494708400\">BDO Appointment</h3><p>The positive news after all of this is that SMCI managed to appoint BDO (the 5th largest accounting firm) after all of the above incidents, which has to be a win because it gives them hope to at least restore investor confidence, and prepare some financial statements. That&#39;s all the good news I can say about this though.</p><p>The bad news is that BDO isn&#39;t a big 4 company that SMCI would have appointed. BDO also has had poor results over recent years in terms of audit quality. To put it simply, SMCI would not have wanted to appoint an auditor outside of the Big 4. It&#39;s a shame that this is the way it is, but for a company in the S&amp;P 500, Big 4 auditors are by far the most common. Unless there&#39;s a good reason not to appoint a Big 4 auditor, S&amp;P 500 companies simply look a bit more questionable if they don&#39;t have a Big 4 company auditing them.</p><p>The other important thing to note is that even though SMCI has appointed a BDO, initial screening or conversations with EY (previous auditor) have not occurred. This was all disclosed in the 8-K but obviously wasn&#39;t part of the headlines. Simply what is happening is that BDO are the only company to at least consider looking at the SMCI books in the hope that everything is ok, and therefore they potentially have one of the biggest clients on the books.</p><p>In my opinion, realistically, the issues that EY found won&#39;t have been resolved and BDO will also likely find these issues, meaning they&#39;ll not sign off.</p><p>Let me take this even further. A first year audit takes a long time. It includes getting a very solid understanding of the company, the internal controls, previous period&#39;s numbers etc., etc. In my opinion, the entire process likely cannot happen before February 2025, which is when NASDAQ has granted a filing extension until.</p><p>If the BDO does manage to get all this work done, and assuming there&#39;s no issues found (unlikely in my opinion), there is still a chance of secondary reviews by regulators.</p><h2 id=\"id_4231930187\">So is SMCI a buy, sell, or hold?</h2><p>SMCI has performed well the last 3 weeks post appointment of auditor, BDO, plus a short squeeze. Whilst the share price shows some potential signs of recovery, I hope this article made it clear exactly how much risk there still is.</p><p>SMCI still has to get BDO to audit their financials by February without any findings, a potential secondary review, and also get through the DoJ investigation to essentially survive. If any of these come back with material findings, I think there&#39;s a very good chance that SMCI gets delisted, which will, of course, have material consequences for all investors.</p><p>Of course, I may be wrong here, and I may be overly worried about the legitimacy of the financials, but when there&#39;s hundreds and if not thousands of other stocks without any risk of these issues, I don&#39;t see why it&#39;s worth risking an investment into SMCI.</p><p>My overall take is that I&#39;d give it a 50:50 chance as to whether SMCI recovers and, in my opinion, investing in them is much more gambling, rather than data driven, educated, smart investing.</p></body></html>","source":"lsy1728464409321","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Super Micro Computer: You're Gambling If You Buy This, Not Investing</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSuper Micro Computer: You're Gambling If You Buy This, Not Investing\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-04 11:45 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4741870-super-micro-computer-smci-gambling-if-you-buy-not-investing><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummarySMCI's recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.SMCI's past issues include NASDAQ delisting, SEC fines...</p>\n\n<a href=\"https://seekingalpha.com/article/4741870-super-micro-computer-smci-gambling-if-you-buy-not-investing\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SMCI":"超微电脑"},"source_url":"https://seekingalpha.com/article/4741870-super-micro-computer-smci-gambling-if-you-buy-not-investing","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1199304506","content_text":"SummarySMCI's recent auditor resignation, and ongoing DoJ investigation make it a highly risky investment despite a recent short-term price surge.SMCI's past issues include NASDAQ delisting, SEC fines, which all raise serious concerns about its financial integrity.The appointment of BDO as the new auditor offers some hope but doesn't eliminate the significant risks and unresolved issues identified by Ernst & Young.Investing in SMCI now is more akin to gambling than smart investing due to the high level of unknowns and potential for severe negative outcomes.SlavkoSereda/iStock via Getty ImagesIntroductionI mostly like to talk about buying opportunities here on Seeking Alpha, but I've noted that a lot of people have been buying Super Micro Computer (NASDAQ:SMCI) recently, post the news that they appointed BDO as auditor.Despite this appointment having some potential good news and a sign of hope, there's way too many unknowns and risk factors that, as investors on the outside, we just don't know the answers to. Of course, when we invest, there's always some unknowns and risks to take, but for me here, there's just way too many unknowns, which makes it a very illogical investment.BackgroundSMCI has been on a crazy ride throughout 2024, rising from $28 back in January all the way up to $115 in March, which equates to a 307% increase in 3 months.It then dropped down to $18 by November 15th, erasing 85% of the total market cap. This drop came after Ernst & Young (SMCI's auditor) resigned on October 24th. Ernst & Young cited reasons including:Lack of trust in managementWeak internal controlsLack of board independenceWhen an auditor resigns from auditing a client the size of SMCI it's never a good sign. Auditors spend hours fighting to win over the biggest clients which allows them to rake in the huge audit fees, but when they deem the risk of being associated with a listed client to be far more negative than the huge audit fees they would receive, there's likely something out of the ordinary going on.Here's why SMCI is not worth investing into.If this auditor resignation was a one-off issue, then I'd be inclined to give SMCI the benefit of doubt (though I'd still remain extremely cautious), but unfortunately this negativity around SMCI is not a one-off at all.The past 6 years has seen:NASDAQ delisting$17.5 million fine to SECHindenburg Research (one of the most famous short sellers)Department of Justice probeI'm going to go over each one of these to explain exactly what's happened and my take on them all.NASDAQ delisting - 2018SMCI was temporarily delisted from the NASDAQ stock exchange in August 2018 due to failure to comply with NASDAQ timelines of financial reports. Companies get delisted for many reasons, however the 3 main reasons are:Voluntary delisting.Falling below a certain market cap or $1.00 stock price.Accounting issues/missed deadlines.Reason 3 is exactly why SMCI got delisted, and it tends to be the least common and perhaps most serious due to the internal inefficiencies. NASDAQ generally does have fairly long \"grace periods\" meaning SMCI failed to comply with the extended NASDAQ deadlines, something which has not happened to a company of SMCI's size in a long time.FineIn 2020, SMCI paid a $17.5 million fine to the SEC for accounting violations in which they neither admitted nor denied the SEC findings. The violations were due to incorrect revenue recognition, understating expenses, and other accounting violations over a period of 3 years.Arguably a one-off instance like this would not cause too much panic, but the continuous nature of this raises skepticism.Department of JusticeOn top of all this negativity, SMCI has an ongoing DoJ (Department of Justice) probe which is looking into accounting violations. DoJ probes are a big deal and are likely to have an overarching effect on the SMCI stock price even if all of all the other unknowns start to become more clear.As I mentioned before with the Hindenburg research, we have to take their report with a pinch of salt since they are a short-seller after all. However, an investigation by the DoJ is much more serious and anything that comes up in that investigation will materially affect SMCI's future.BDO AppointmentThe positive news after all of this is that SMCI managed to appoint BDO (the 5th largest accounting firm) after all of the above incidents, which has to be a win because it gives them hope to at least restore investor confidence, and prepare some financial statements. That's all the good news I can say about this though.The bad news is that BDO isn't a big 4 company that SMCI would have appointed. BDO also has had poor results over recent years in terms of audit quality. To put it simply, SMCI would not have wanted to appoint an auditor outside of the Big 4. It's a shame that this is the way it is, but for a company in the S&P 500, Big 4 auditors are by far the most common. Unless there's a good reason not to appoint a Big 4 auditor, S&P 500 companies simply look a bit more questionable if they don't have a Big 4 company auditing them.The other important thing to note is that even though SMCI has appointed a BDO, initial screening or conversations with EY (previous auditor) have not occurred. This was all disclosed in the 8-K but obviously wasn't part of the headlines. Simply what is happening is that BDO are the only company to at least consider looking at the SMCI books in the hope that everything is ok, and therefore they potentially have one of the biggest clients on the books.In my opinion, realistically, the issues that EY found won't have been resolved and BDO will also likely find these issues, meaning they'll not sign off.Let me take this even further. A first year audit takes a long time. It includes getting a very solid understanding of the company, the internal controls, previous period's numbers etc., etc. In my opinion, the entire process likely cannot happen before February 2025, which is when NASDAQ has granted a filing extension until.If the BDO does manage to get all this work done, and assuming there's no issues found (unlikely in my opinion), there is still a chance of secondary reviews by regulators.So is SMCI a buy, sell, or hold?SMCI has performed well the last 3 weeks post appointment of auditor, BDO, plus a short squeeze. Whilst the share price shows some potential signs of recovery, I hope this article made it clear exactly how much risk there still is.SMCI still has to get BDO to audit their financials by February without any findings, a potential secondary review, and also get through the DoJ investigation to essentially survive. If any of these come back with material findings, I think there's a very good chance that SMCI gets delisted, which will, of course, have material consequences for all investors.Of course, I may be wrong here, and I may be overly worried about the legitimacy of the financials, but when there's hundreds and if not thousands of other stocks without any risk of these issues, I don't see why it's worth risking an investment into SMCI.My overall take is that I'd give it a 50:50 chance as to whether SMCI recovers and, in my opinion, investing in them is much more gambling, rather than data driven, educated, smart investing.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":378703097901304,"gmtCreate":1733482362132,"gmtModify":1733714289822,"authorId":9000000000000692,"author":{"id":9000000000000692,"idStr":"9000000000000692","authorId":9000000000000692,"name":"BartonBecky","avatar":"https://static.tigerbbs.com/58026ab8f0edf0d829859314a737d6a4","vip":8,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":377840219537768,"type":1,"supId":0,"prevId":0,"content":"Your insights are valuable","text":"Your insights are valuable","html":"Your insights are valuable"}],"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":17,"commentSize":5,"repostSize":5,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1199304506"}