super microcomputer‘s (NASDAQ: SMCI) The stock price closed the daily session down 8.3%. Meanwhile, the S&P 500 (SNPINDEX: ^GSPC) ended the day up 0.4%, and the Nasdaq Composite (NASDAQ INDEX: ^IXIC) It ended the session with a rise of 1.2%.
Supermicro shares lost ground today following news that the company may be looking to raise funds through equity sales or new debt. The company’s stock price was probably also affected due to the delisting of shares from the Nasdaq-100 index.
After the market closed on Friday, Bloomberg reported that Supermicro had hired evercore to help you raise new sources of capital. The report claimed that the server specialist was willing to take out new credit lines and sell new shares to raise funds. Through Evercore, Supermicro is said to be approaching private equity firms to gauge potential investment interest. The potential new fundraising push is said to be in the early stages.
If Supermicro raises cash by selling more shares, this would have a dilutive impact on existing shareholders. Selling new shares means that the company’s capital structure would be divided into a larger number of parts, with each part representing a smaller slice of the total pie.
Supermicro has been taking steps to prepare its delayed 10-K report and avoid being delisted. Nasdaq bag. If the stock were delisted from the Nasdaq exchange, the stock’s trading volume would drop dramatically and its price would likely plummet. Adding further downward pressure, the stock would be delisted from exchange-traded funds (ETFs) that track the Nasdaq and other indices.
Supermicro has been able to avoid this issue so far and says it should file its 10-K report with the Securities and Exchange Commission (SEC) by February 25. But it has been unable to prevent its shares from being removed from a separate index.
The Nasdaq-100 is an index consisting of the 100 largest non-financial companies listed on the Nasdaq Stock Exchange. Due to recent volatility, Supermicro was removed from the index and replaced by Palantir Technologies today. As a result of the removal, Supermicro shares will also be removed from ETFs that track the index. That means shares of those funds are being sold, creating bearish valuation pressure for stocks.
While the removal from the Nasdaq-100 doesn’t mean Supermicro will continue to decline in the long term, the stock’s replacement highlights recent challenges for the company that have yet to be resolved.