Supermicro Temporarily Avoids Crisis
Super Micro Computer (hereafter Super Micro), an artificial intelligence (AI) beneficiary stock facing delisting risk due to delayed annual report submission, has submitted a compliance plan. As a result, it has temporarily escaped the risk of delisting, causing its stock price to surge about 40% in after-hours trading.
On the 18th (local time), Super Micro announced in a press release after the New York Stock Exchange closed that it had appointed BDO USA, a U.S. accounting and consulting firm, as an independent accounting auditor and submitted a compliance plan.
The server manufacturer Super Micro, which has been under suspicion of accounting fraud, failed to submit its fiscal year 2024 report (10-K report) ending in June and the quarterly report (10-Q report) ending in September to the U.S. Securities and Exchange Commission (SEC). In response, the Nasdaq Stock Market notified Super Micro last September to submit the annual report or a compliance plan by this day.
If this requirement was also violated, Super Micro was highly likely to proceed with delisting. According to SEC regulations, all listed companies must submit the 10-K report within 90 days after the fiscal year-end. If delisting becomes imminent, Super Micro would also be removed from the S&P 500 index, which mainly consists of large-cap stocks that it joined this year.
Bloomberg reported that if Nasdaq accepts Super Micro’s plan, the deadline for submitting the 10-K report is likely to be extended to February next year. However, if Nasdaq rejects Super Micro’s plan, the company can appeal. Either way, the company has at least temporarily freed itself from the immediate delisting risk.
On the day of the optimistic outlook regarding the Nasdaq compliance plan submission, Super Micro’s stock closed at $21.54, up 15.93% on the New York Stock Exchange, and surged about 40% in after-hours trading.
Super Micro, which manufactures servers equipped with the latest AI chips from AI chip leader Nvidia and has ridden the AI boom, saw its stock price soar more than 14 times from the end of 2022 to its peak in March this year, but plunged over 80% amid accounting fraud allegations.
In April, a former Super Micro employee filed a lawsuit against the company and CEO Charles Liang for accounting violations, and in August, the accounting fraud allegations escalated following a report by short-seller Hindenburg Research. Later, at the end of last month, news even emerged of the resignation of Ernst & Young (EY), which was responsible for Super Micro’s accounting. Super Micro is also under investigation by the U.S. Department of Justice for accounting fraud allegations.
This is not the first time Super Micro has faced accounting fraud controversies. The company was delisted from Nasdaq in 2019 for failing to meet deadlines for submitting the 10-K report and several quarterly reports but was relisted in 2020. Hindenburg Research referred to Super Micro as a "serial offender" in its short-seller report.
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