Super Micro Computer (SMCI) stock continued its rally on Friday, with the stock on track to post a 78% weekly gain.
Shares of Super Micro, the AI server maker that uses Nvidia (NVDA) chips and has a major deal with Elon Musk’s xAI, rose more than 11% in Friday trading to about $33. Even with that gain, shares are still well below highs above $120 in March following SMCI’s addition to the S&P 500.
The stock’s rally began Monday in anticipation of Super Micro’s submission of a compliance plan to Nasdaq (^IXIC) in its bid to avoid delisting. The stock soared when the company officially announced that it had submitted the plan and hired a new auditor, BDO. Super Micro’s previous accountant, Ernst & Young, resigned at the end of October.
Super Micro has been dealing with the fallout from an August report by short-seller firm Hindenburg Research, which flagged alleged poor accounting practices, violations of export controls and murky relationships between top executives and partners at Super Micro. Following the Hindenburg report, Super Micro delayed filing its annual 10-K and most recent quarterly 10-Q reports with the Securities and Exchange Commission, putting the company at risk of being delisted from the Nasdaq. Super Micro is also reportedly being investigated by the Department of Justice.
The avalanche of bad news has sent stocks tumbling in recent months. EY’s resignation, in particular, caused Super Micro shares to drop more than 30% in a single day in late October. The accountant wrote in his resignation letter that he was “unwilling to be associated with the financial statements prepared by [Super Micro] management.”
Compounding its woes, Super Micro’s fiscal first-quarter earnings report on Nov. 5 fell short of Wall Street’s expectations. As Wedbush analyst Matthew Bryson wrote in a note to investors at the time, the company attributed the sales decline to delays to Nvidia’s Blackwell AI chips and problems with its SEC filings. Bryson maintains a Neutral rating on the stock and recently lowered his price target on the stock to $24 from $32.
Other companies such as Barclays (BCS), Wells Fargo (WFC) and KeyBanc have suspended coverage of the stock.
Super Micro said Monday that it is on track to file delayed filings with the SEC “and catch up on its periodic reports within the discretionary period available to Nasdaq staff to grant them.”
Wedbush’s Bryson wrote in a separate note on Nov. 19 in response to Monday’s news: “We view hiring a new auditor as an important positive step for SMCI, as it resolves perhaps the most substantial concern regarding capacity.” for SMCI to remain listed…and creates a potential path for SMCI to file its financial statements and restore NASDAQ compliance.”