Super Micro shares plunge after company delays annual report following short-seller report

Shares of Super Micro Computer (SMCI) fell as much as 18% early Wednesday after the company announced it would postpone the filing of its annual report for the fiscal year ending June 30.

The announcement comes one day after short seller Hindenburg Research accused the AI ​​high-flyer of, among other things, “balance sheet manipulation.”

“SMCI is unable to file its annual report within the required time period without undue burden or expense,” the company said in a statement. “SMCI's management requires additional time to complete its assessment of the design and operating effectiveness of its internal controls over financial reporting as of June 30, 2024.”

Super Micro's shares rose from $290 in early January to around $1,200 in March. The stock was added to the S&P 500 in March.

Super Micro shares have fallen more than 60% since their March peak, but are still up 50% year-to-date. The company recently announced a 10-for-1 stock split effective October 1.

The stock fell about 2% on Tuesday after Hindenburg said its three-month investigation had “uncovered glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.” The company also said it had taken a short position in Super Micro.

The maker of data center servers and management software caught investors' attention this year as it rode the AI ​​wave. The company is buying components from AI chip maker Nvidia (NVDA).

In his report, Hindenburg alleged that despite a $17.5 million settlement with the SEC in August 2020 following an investigation into “widespread accounting violations,” Super Micro's business practices had not improved and senior executives who left the company in the wake of the scandal were later rehired.”

The report quoted a former salesperson as saying: “Almost all of them are back. Almost all of the people who were fired were the cause of this misconduct.”

“Even after the SEC settlement, pressure to meet quotas forced salespeople to cram sales channels with distributors by making 'partial deliveries' or delivering defective products at the end of the quarter, according to our interviews with former employees and customers,” Hindenburg said in his report.

“Overall, we believe Super Micro is a serial offender who has repeatedly acted.”

Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X at @ines_ferre.

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