Super Micro Computer (NASDAQ: SMCI) stock had an enormous November and has begun December with a bang. It has been a somewhat hectic time for the supplier of artificial intelligence (AI) server stacks and coolant systems. Yet if all of the concerns grow to be less impactful than many investors have feared, there might be far more upside for these shares, too.
The massive recovery in Supermicro shares began with a 12.1% gain over the month of November, in response to data provided by S&P Global Market Intelligence. However it didn’t stop there. In only the primary two trading days of December, the stock has surged greater than one other 30%. And it is probably not done yet.
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That massive move didn’t mean the stock has fully recovered from the panic selling that preceded it, though. While a recovery is underway, it’s still down by greater than 45% during the last six months. Here’s a temporary summary of what caused the stock to plunge:
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Short-seller firm Hindenburg research released a report in late August accusing Supermicro’s management of accounting manipulation, export control failures, and other business culture issues.
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Supermicro immediately followed that with a delay in filing its 10-K annual report for its fiscal 2024 period ended June 30, 2024.
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The corporate received a noncompliance letter from the Nasdaq Stock Market.
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Supermicro’s auditor resigned in late October after raising concerns months earlier.
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Supermicro released initial results from an independent special committee on Nov. 5 finding “no evidence of fraud or misconduct on the a part of management or the board of directors.”
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The corporate filed a compliance plan with Nasdaq and named a latest auditor on Nov. 18.
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The special committee released details of its accomplished review on Dec. 2 supporting preliminary findings, and noting that no restatement of previously reported financial results is predicted.
The result has been a way of investor relief bringing buyers back into the heavily shorted stock. And that momentum may not yet have run its course. About 17.5% of the corporate’s stock float was shorted as of mid-November, in response to MarketWatch. But investors should realize that the continuing short squeeze will come to an end, and the main target will should be back on the business itself.
The corporate plans to adopt several recommendations from the special committee. Those include hiring a latest chief financial officer (CFO), a chief compliance officer, and general counsel. It also will begin a program for continuous improvements in its financial controls and compliance processes.