Investors in Super Micro Computer (SMCI, Financial) have been anxiously awaiting a plan that would allow the company to remain listed on Nasdaq, as the deadline approaches. The company has until November 18 to submit its delayed 10-K annual report or propose a plan to Nasdaq to comply with the exchange's requirements.
The original deadline for submission was November 16. However, Nasdaq rules allow for an extension if the deadline falls on a non-business day, which postponed the deadline to the next business day. A company spokesperson reiterated that Super Micro intends to take all necessary measures to meet these requirements quickly.
The delays trace back to August after a negative report from short-seller Hindenburg Research. Compounding issues include an ongoing U.S. Department of Justice investigation and the resignation of auditor Ernst & Young in October over governance and transparency concerns.
This week, Super Micro further delayed its quarterly 10-Q filing for the period ending September 30. A board-formed committee has completed its review of issues raised by Ernst & Young, with some tasks still ongoing, but the review is expected to conclude soon.
Wedbush analyst Matt Bryson noted the potential impacts of hiring a new auditor and filing financial reports, stressing the uncertainties and possible outcomes affecting Super Micro's strategy.
Since the announcement of delays in August, SMCI's stock has plunged nearly 70%, with a more significant decline of 85% since its March peak, resulting in a market value loss of over $55 billion.
If Nasdaq approves Super Micro's plan, the filing deadline could extend to February. Otherwise, the company can appeal. Missing the Nasdaq deadline could have severe consequences, including possible removal from the S&P 500 index, which the company joined this year, and triggering a $1.725 billion bond repayment.
This is not the first time Super Micro faces delisting. In 2019, the company was removed for failing to timely submit reports, a situation analyst Bryson finds unprecedented for happening twice. Super Micro was re-listed on Nasdaq in 2020 after settling U.S. SEC accounting investigations with a $17.5 million fine, without admitting or denying allegations.
The current challenges mark a reversal in stock performance after early 2024 gains driven by AI trends and inclusion in the S&P 500. In November, a business update revealed weaker than expected revenue forecasts of $5.5 billion to $6.1 billion, below Wall Street's anticipated $6.8 billion.
