Shares of Super Micro Computer Inc (SMCI) plunged over 16% on November 5, 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 and Q2 guidance that fell short of analysts' expectations, signaling potential sales challenges amid the turmoil. More notably, the company disclosed 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 stock selloff was exacerbated by the abrupt resignation of SMCI's auditor, Ernst & Young, last week. Ernst & Young cited concerns over the company's governance, transparency, and unwillingness to be associated with its financial statements prepared by management. While an independent probe found no evidence of fraud or misconduct by management so far, it recommended remedial measures to improve oversight functions, acknowledging deficiencies.
