Super Micro has been plagued by accounting issues that threaten to delist it from the Nasdaq exchange. Nasdaq has given Super Micro until February 25 to get up to date with its annual accounts.
Investing in SMCI has required plenty of patience amid uncertainty. It’s down by more than 75% from its all-time high, but its impact on the AI industry cannot be denied. The company’s liquid cooling solutions have resulted in many partnerships and large customer contracts.
CEO Charles Liang said in December that he was confident the stock would not be delisted. There hasn’t been much news about SMCI stock since those comments. The company finally gave investors something they wanted to hear on February 3.
Super Micro Sets a Date for a Q2 FY25 Business Update
The big news is that Super Micro will release a business update on February 11. On this date, investors will have more clarity about the company’s financial performance and the status of its 10-K form. Shares have been in limbo since Super Micro delayed its 10-K filing in late August.
Essentially, investors will have a pretty good idea of whether Super Micro will get delisted or not on February 25. It’s a significant event that should result in a lot of volatility for the stock. Shares jumped by more than 8% upon the announcement, so it’s easy to imagine SMCI stock will have a sharper price movement on February 11.
What’s the Dream Scenario?
Investors just want an updated 10-K and accurate financial results. Although accounting issues have surrounded Super Micro, it isn’t a fraudulent company like Enron. Even with the accounting issues, Super Micro still secured a partnership with Elon Musk’s xAI,
Super Micro’s partnerships and the quality of its solutions are real. The company is in a hyper-growth industry and has delivered compelling growth rates for long-term investors. If the company’s financials are legitimate, and the stock avoids a delisting, the share price should quickly surge.
Super Micro traded at close to $50/share before Hindenburg Research’s report took them down to current levels. AI has continued to blossom during that time, and Super Micro only has a 14 P/E ratio. That’s an incredible steal for an AI company if the dream scenario is realized.
It’s Not All Clear
One of the concerns about Super Micro’s announcement is that it is only an update on Q2 FY25 results instead of an earnings report. Those are two very different things, and it’s possible that this update goes by without any timetable for the 10-K.
Super Micro released a similar update on Q1 FY25 results in November. There wasn’t really much of an update on the critical 10-K form. The press release just mentioned that the company “continues to work diligently on matters related to the Form 10-K for the fiscal year ended June 30, 2024.”
It’s possible that the Q2 FY25 is another nothing burger that falls short of providing a 10-K form. This scenario can send the stock reeling downward, as investors may not like holding a company right before it gets delisted.
Super Micro is well-positioned in the AI industry, which may attract speculators. However, it is currently a high-risk, high-reward play.
