Is Super Micro Computer Stock a Buy? 3 Things to Watch. – Yahoo Finance
The stock is down 78% from its all-time high in March. super microcomputer(NASDAQ:SMCI) It may be one of the first dominoes to fall as the artificial intelligence (AI) hype cycle reaches its possible conclusion. but so far, This selloff seems to have little to do with company fundamentals and more to do with questionable accounting practices and possible fraud.
let's Before considering a position in this crowded tech stock, let's explore three factors to watch.
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The latest sign of trouble for Supermicro came in late August, when short seller Hindenburg Research, which stands to gain financially from falling stock prices, alleged that the company engaged in accounting manipulation, self-dealing, and fraud. This appeared when the report was released. sanctions related to Russian Invasion of Ukraine. Some of these accusations intensified last week when SupermIkuro's According to Supermicro, auditor Ernst & Young resigned as follows.Information recently brought to our attention has led us to resign because we can no longer rely on the representations of management and the audit committee and no longer wish to have any involvement in the financial statements prepared by management. I…”
To make matters worse, Supermicro is also reportedly under investigation by the Department of Justice, which is said to be in contact with former employees of the company and others.
These developments I don't inevitably affects SupermIkuro's operation. But it could create skepticism about the accuracy of the report and potential fines if executives are found guilty of wrongdoing, hurting the company's reputation. Unfortunately, this may be the best-case scenario for a company that is facing increasing challenges.
superumIkuro's The situation could get even worse. public company is required to An auditor must be appointed and financial statements must be submitted by the following deadlines: be deadline. The company fails to comply with both requirements and is at risk of being delisted from Nasdaq.
After failing to submit an annual 10-K annual report in August, management will now have to submit a compliance plan by mid-November, pushing the deadline (if approved) to February 2025. There is a possibility that However, Supermicro is still in a catch-22 situation. I don't There is an auditor, but new companies may be hesitant to take on the role due to ongoing issues..
Wedbush analyst Matt Bryson highlighted the difficult situation in an interview with Bloomberg. “I think they are It could probably be delisted just because of the timeline involved. How do they come up with $10,000 in just a few months? please don't There is an auditor, but the last auditor resigned.? ”
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If it's super micro teeth Delistingthe stock will probably move to over the counterMarkets that may be less liquid than traditional exchanges. However, this I don't It should be permanent so companies can come back into compliance and relist. For example, the stock was delisted in 2019 after failing to meet Nasdaq reporting deadlines, and returned to the exchange in 2020.
most of superumIkuro's The biggest short-term challenge may be hurting valuations rather than fundamentals, and we announced some preliminary but encouraging news earlier this week. On Nov. 5, the company released an update from its “Independent Special Committee,” suggesting net sales for the fiscal first quarter (quarter ended Sept. 30). $5.9 billion to $6 billion.
These numbers are management team Previous guidance was $6 billion to $7 billion, which represents 180% growth compared to $2.12 billion in the year-ago period. and Expected price earnings ratio Supermicrocomputer stock at 7.65 is starting to look like a pretty good deal, but Until we have more clarity, this speculative play may not be worth considering.
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Will Ebifan has no position in any of the stocks mentioned. The Motley Fool has no position in any stocks mentioned. The Motley Fool has Disclosure policy.
