After markets closed last Friday, November 15, 2024, Super Micro Computer (SMCI) gained as much as 20%. SMCI’s delayed annual report filing creates serious de-listing risks.
Barron’s, a media firm, cited a person familiar with the matter that it has a plan that could help it avoid a delisting. On September 17, Nasdaq sent SMCI a letter warning that it would delist the firm. SMCI had until this past weekend, November 16, to submit a plan. Despite the firm disclosing early last week that it would not submit an annual report on time, it would not file a first-quarter report on time, either.
Investors who dismissed Ernst and Young’s resignation as auditor paid a price. SMCI stock lost nearly one-quarter of its value in the last week. Still, the stock is only down by around 35% YTD.
The firm is not a stranger to delisting. In 2018, the exchange delisted the stock. The stock performed well after the delisting, gaining 73% from August 22, 2018, until its relisting in January 2020.
Your Takeaway
Investors should consider Dell Technologies (DELL) and Hewlett-Packard Enterprise (HPE) instead. Those firms do not have major uncertainties that SMCI faces. Although SMCI could soar again if it filed the report, the firm is unwilling to add accounting staff and resources to do so.
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