Super Micro Computer Inc. supplies hardware to Nvidia and some other AI players|@Supermicro_SMCI|X
Super Micro’s stock dropped over 14% on Thursday, losing all its gains from this year. The sharp decline came after Ernst & Young (EY), the company’s accounting firm, resigned in the middle of an audit.
SMCI shares ended Wednesday at $33.07, down $16.05.
EY’s resignation letter said they found information that made it impossible to trust the company’s internal controls in financial reports.
The heightened scrutiny follows accusations from Hindenburg Research in August, alleging “accounting manipulation.” Shortly after, the Department of Justice (DoJ) launched an investigation, intensifying investor concerns.
After EY’s resignation, the investment firm Argus downgraded Super Micro’s stock from “Buy” to “Hold,” and other firms, like Needham and Wells Fargo, suspended their stock coverage.
Argus analyst Jim Kelleher explained that the company’s legal issues are now weighing down the stock.
In response, Super Micro said it disagreed with EY’s decision and is working to hire new auditors.
Despite the recent hit, Super Micro has benefited from the AI surge, and shares are still up 17% for the year. It supplies hardware to Nvidia and some other AI players.
In the fourth quarter, the company’s revenue surged to $5.31 billion, a 143% increase from the same time in 2023.