The mad dash to adopt artificial intelligence (AI) has catapulted a number of companies into the spotlight, and Super Micro Computer (NASDAQ: SMCI), commonly called Supermicro, has arguably been one of the biggest beneficiaries. The company is the leading provider of servers specially designed to withstand the rigors of AI, giving Supermicro a pivotal role in the AI revolution.
However, the spotlight can be a cruel mistress, which Supermicro recently experienced firsthand. The company became a victim of its own success, causing a number of self-inflicted injuries that sent the stock plunging as much as 84% from its all-time high, reached earlier this year.
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Supermicro announced that it had developed a plan to avoid delisting and had hired a new auditor. The news sent the stock soaring, up more than 30% Tuesday morning (as of this writing).
Let’s take a look at the events leading up to today, the company’s big announcement, and what it means for investors.
Image source: Getty Images.
Supermicro was flying high earlier this year, riding the wave of AI adoption that caused a surge in demand for its AI-centric servers, sending the stock up more than 1,000% since the AI revolution kicked off in early 2023. But the celebration was short-lived, and the stock came crashing down. For those who haven’t been following along, here’s a quick recap of the issues that have plagued the beleaguered company:
Hindenburg issued a short report that alleged, among other things, that Supermicro’s financials contained accounting irregularities, the company had failed to disclose related-party transactions, and had violated U.S. export bans.
The very next day, Supermicro added fuel to the fire by announcing it would be late filing its annual 10-K report with the Securities and Exchange Commission (SEC), saying it needed additional time to review its internal controls — or the processes it uses to ensure compliance with accounting rules and regulations.
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