Super Micro Computer (NASDAQ:SMCI) shares had been on a stellar run, capitalizing on the AI boom and turning the company into one of the past year’s biggest success stories. However, two events this week have seen the story take a sharply negative turn.
First, a report from short-seller Hindenburg Research alleged the company has been involved in “accounting manipulation, sibling self-dealing, and sanction evasion.”
Subsequently, the stock took a bit of a hit but mostly recovered as the allegations appeared to be brushed away by the market. However, Hindenburg must have felt very satisfied with what came next.
On Wednesday, SMCI announced a delay in filing its annual 10-K report. If the bears needed any fodder, then surely that was ample supply, and the market reacted accordingly, with shares swooning by 19% in the session.
It’s worth noting that back in 2018, SMCI was temporarily de-listed from the NASDAQ due to a delayed F2017 10-K filing.
So, what’s the real story?
To shed some light, Wells Fargo analyst Aaron Rakers had a brief conversation with SMCI’s CFO, David Weigand, who emphasized several key points: “1. This is about internal controls—we think it is hard to narrow this down as internal controls could be considered far encompassing. 2. SMCI has not made any updates to results (F4Q24 or FY24) nor forward guidance expectations, 3. SMCI emphasized that it just finished FY24 w/ 110% y/ y growth and provided strong FY25 guide @ $26-$30B (>70% y/y growth).”
Despite these reassurances, Rakers, who is ranked in the top 1% of Wall Street stock experts, has lowered his price target on SMCI from $650 to $375 (16.5% downside), citing “uncertainty/concern over revenue recognition, and SMCI’s history.” His rating remains an Equal Weight (i.e., Neutral). (To watch Rakers’ track record, click here)
On the other hand, Rosenblatt’s Hans Mosesmann offers a more optimistic take. While he concedes that the delay is “not a good look,” he believes the market’s reaction is “over the top.”
Noting that the delay has nothing to do with Hindenburg’s report (of which the company was not aware and which he calls “old news or inaccurate”), Mosesmann continues to stand by the company. “The business remains strong and healthy, and there have been no changes to the company’s financial results,” says this 5-star analyst. “Management is concerned about new allegations of shipments to Russia as Supermicro does not ship to that country and would report it if a partner had done so.”
Mosesmann, who sits in the 4th spot amongst the Street’s analysts for the accuracy of his predictions, reiterated a Buy rating on SMCI shares along with a $1,300 price target. The figure makes room for 12-month returns of a strong 193%. (To watch Mosesmann’s track record, click here)
Overall, the analysts are split on SMCI, with 5 Buys and 5 Holds, plus one Sell, leading to a Moderate Buy consensus rating. The average price target stands at a promising $978.5, implying a potential 118% gain over the next year. (See SMCI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
