Super Micro Computer stock sank on Wednesday, down for the second day in a row.
The stock closed lower 5.6% at $38.29 on Wednesday. It closed down 8.2% on Tuesday. There are a couple of concerns swirling around the company’s stock.
First, fears are mounting that the artificial intelligence server maker might be delisted from the Nasdaq for failing to file financial accounts. CEO Charles Liang said he was “confident” shares won’t get delisted from the stock exchange when he spoke to reporters at the Reuters NEXT event in New York on Tuesday. Last week, the company was granted an extension to file its delayed annual and quarterly reports by Feb. 25, avoiding the immediate threat of delisting. Liang said these reports would be filed by the new deadline.
Even if Super Micro stock remains listed on the Nasdaq, there’s a good chance that it will be knocked out of the Nasdaq 100—which contains the Nasdaq’s largest companies—when the index conducts its annual reconstitution on Dec. 13.
According to Barron’s Andrew Bary, the reconstitution is a process in which Nasdaq-listed companies are ranked by market value based on stock prices on the last trading day of November, which is Nov. 29 this year. Super Micro is one of the Nasdaq 100 companies with the lowest market values based on Nov. 29 data, and thus vulnerable to deletion. Indexers and ETF managers buy and sell stocks based on the Nasdaq 100.
Analysts covering Super Micro stock, which trades under the ticker SMCI, have quickly become cautious about the company. Out of 11 equity analysts covering Super Micro, 64% have a Hold or equivalent rating on shares, according to FactSet. The bulls and bears are equally divided with 18%—or two analysts each—rating the stock as either Buy or Sell.
That compares starkly with recommendations in June—when 83% rated the stock Buy and 8% rated it Hold and Sell, respectively.
The reason for analysts’ increased caution is likely the wait for more information. New auditor BDO’s findings will face scrutiny, as will Super Micro’s financial reports when they are published. Many are also looking for more details about why E&Y resigned.
The independent committee recommended the company appoint a new chief financial officer, chief compliance officer, and general counsel, about which investors are eagerly awaiting news as well.
Super Micro didn’t respond to a Barron’s request for comment.
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