Super Micro Computer (SMCI) has had a tumultuous six months, with its stock plummeting in August after it delayed its 10-K filing. The company faced scrutiny from short-seller Hindenburg Research, which accused it of accounting malfeasance and inconsistencies. In October, Ernst & Young resigned as auditor, further undermining confidence.
However, investors seem to be cautiously optimistic about the company’s prospects now that a date has been set for filing its fiscal 2024 report by February 25. The news boosted the stock 25% between February 5 and 12, suggesting that the worst may be over from financial reporting issues.
Supermicro’s second-quarter earnings report showed brisk growth, but results fell short of estimates. Revenue came in at $5.6 billion to $5.7 billion, representing 54% growth at the midpoint. However, investor concerns about gross margin remained, as it fell to 11.8-11.9%, down from 15.4% last year.
The company cut its full-year revenue guidance from $26 billion to $30 billion to $23.5 billion to $25 billion. Management also disclosed receiving subpoenas from the DOJ and SEC following the short-seller report, but stated it’s cooperating with document requests.
As investors await the reports’ release on February 25, it’s essential to consider whether it’s safe to buy Supermicro stock now. The company may face new challenges if growth continues to slow and margins keep falling. However, if filings happen on time and there are no major adjustments, investors can reassess the business based on its performance rather than accounting malfeasance.
For now, keeping February 25 circled on the calendar is crucial in determining the company’s future. Investors should be cautious but also consider the potential for a turnaround if the reports are filed as planned.
Source: https://www.fool.com/investing/2025/02/17/up-25-in-the-last-week-is-it-safe-to-buy-super-mic