Shares of Super Micro Computer (NASDAQ: SMCI) soared yesterday after the corporate announced that it filed a plan to stay listed on the Nasdaq Stock Exchange and, possibly more importantly, hired a recent independent auditor.
The stock spiked about 31% on that news, after it had been in free fall in recent weeks. But Supermicro shares were giving back a few of yesterday’s gains in the present session. As of three:17 p.m. ET, shares were down by 10.1% today.
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Appointing a recent auditor was critical, and maintaining its listing on the Nasdaq exchange can also be essential for the corporate and the stock. But there are still going to be ramifications from Supermicro’s accounting questions.
In a business update presented on Nov. 5, the corporate reduced revenue guidance for its fiscal 2025 first quarter ended Sept. 30. It also provided lower sales guidance for its fiscal second quarter than investors had hoped. But the corporate also shared that an independent committee investigating concerns raised by its previous auditor didn’t lead to findings of fraud or misconduct.
That is positive news, however it doesn’t eliminate the uncertainty in its business. And it would not be a stretch to think that Supermicro’s midpoint quarterly revenue guidance of $5.95 billion and $5.8 billion, respectively, could again be reduced in the longer term. In spite of everything, customers may not wish to risk placing some orders amid the dynamic situation.
That said, the stock is now trading with a market cap of about $15 billion. Even when the stated guidance is reduced by one-third and extrapolated for a full 12-month period, annual revenue would total greater than $15 billion. That might lead to a price-to-sales ratio of about 1, and that could possibly be an interesting place to start out an investment.
But investors willing to take the danger should enter with eyes wide open. It’s possible that Supermicro’s rejuvenation could possibly be short-lived, and the business could still disintegrate. Business results still have to be confirmed, and a few investors were comfortable to book yesterday’s pop.
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