Super Micro Computer Inc. (SMCI) shares plummeted over 26% on November 6th, 2024, as the company grappled with mounting concerns surrounding its accounting practices and financial reporting controls.
In a preliminary update, SMCI reported Q1 FY2025 revenue of $5.9 billion to $6 billion, falling short of its previous guidance range of $6 billion to $7 billion. The company also lowered its Q2 revenue guidance to $5.5 billion to $6.1 billion, missing analysts' expectations of $6.86 billion.
More significantly, SMCI disclosed that it remains unable to predict when it will file its delayed annual 10-K report for FY2024, raising the risk of non-compliance with Nasdaq listing requirements. The company had previously received a notification from Nasdaq stating that it was not in compliance with the exchange's timely filing rules.
The stock selloff was exacerbated by the abrupt resignation of SMCI's auditor, Ernst & Young (EY), last week. EY cited concerns over the company's governance, transparency, and unwillingness to be associated with SMCI's financial statements prepared by management.
While an independent probe found no evidence of fraud or misconduct by SMCI management so far, it recommended remedial measures to strengthen the company's internal governance and oversight functions, acknowledging deficiencies.
