To The Moon

$SUPER MICRO COMPUTER INC(SMCI)$

SMCI Earnings Miss

Super Micro Computer (SMCI) recently reported its fiscal fourth-quarter earnings, and unfortunately, it missed analysts' expectations. Here are some key details:

• Earnings Per Share (EPS): SMCI reported non-GAAP EPS of $6.25, which missed the Zacks Consensus Estimate by 22.2%.

• Revenue: The company's revenue surged 143% year-over-year to $5.31 billion, slightly surpassing analysts' expectations.

• Stock Performance: Following the earnings report, SMCI's stock fell over 10% in after-hours trading. The stock is currently trading at $26.34, significantly below its 200-day simple moving average of $71.97.

  For company that already heavy pressure with fake accounting and now the earnings miss, SMCI is in dangerous zone. However, the company will still need to address its governance and compliance issues to regain investor confidence.

Challenges & De-listing issue

SMCI has faced governance issues, including the resignation of its auditor Ernst & Young over transparency concerns, and a potential delisting from the Nasdaq if compliance issues are not resolved by November 16.

Auditor Resignation: Ernst & Young (EY) resigned as SMCI's auditor, citing a loss of confidence in the company's financial statements and governance. This has raised significant concerns about the company's internal controls and transparency1.

Nasdaq Compliance Deadline: SMCI has until November 16, 2024, to submit a compliance plan to Nasdaq. If the company fails to meet this deadline, it risks being delisted from the stock exchange1.

Financial Reporting Issues: SMCI has been unable to file its annual 10-K report on time, which has further complicated its efforts to regain compliance. The company is also under investigation by the U.S. Department of Justice for potential revenue inflation2.

Stock Performance: SMCI's stock has plummeted over 75% since March 2024, and it is currently trading at $26.34, far below its 200-day moving average of $71.971. The stock has also been in bear territory, indicating a negative outlook.

The company has set up a special committee to address these issues and is working to identify a new auditor. However, the path to regaining compliance and restoring investor confidence remains challenging.

SMCI now has until November 16, 2024, 10 day count down to submit a compliance plan to Nasdaq to avoid delisting. The company is also under investigation by the U.S. Department of Justice for potential revenue inflation. These issues have created a lot of uncertainty and negatively impacted investor confidence.

$SUPER MICRO COMPUTER INC(SMCI)$ Valuation is trading at a significant discount from its peak, making it potentially attractive for value investors. However, it's important to consider the risks, including governance issues and the potential for restatements of financial statements. Investors should weigh these factors and consider diversification to mitigate potential risks.