Super Micro Computer Inc. saw a sharp 28.6% reduction in its share price within a week. Such a drastic drop has set off alarm bells among investors, leading to concerns about the stability and future of the company.
The tech firm is struggling to convince the market of its financial steadiness among the current market conditions. This decrease has led to speculations about underlying company-specific issues beyond the market conditions.
Hindenburg Research revealed that SuperMicro carried out transactions worth approximately $983.1 million over the past three years. These funds were directed towards private businesses run by the brothers of SuperMicro’s CEO, Charles Liang.
This creates concerns about the nature of the financial relationship between Liang and his brothers’ companies.
SuperMicro’s financial woes stir investor fear
Questions have also been raised about the financial management and corporate governance practices in SuperMicro.
SuperMicro’s history includes two prior accounting issues in 2018 and 2020. Financial figures discrepancies and accounting irregularities identified led to thorough reviews and audits. These incidents propose the need for more stringent oversight within the company.
SuperMicro announced a delay in submitting its yearly report to the SEC. The company plans to carry out a detailed examination of their financial reporting system’s design and operational efficiency, placing accuracy and reliability over punctuality, sans a specific timeline for the probe.
Supermicro has also been found to be in violation of trade sanctions. Despite a ban on the export of high-throttle server processors to China, SuperMicro reportedly continued supplying them – further damaging their reputation.
Despite maintaining a neutral position on SuperMicro shares, Wells Fargo revised its price target downwards due to uncertainties around revenue outlook and past accounting inconsistencies.
Conversely, Bank of America upgraded its rating for SuperMicro, despite placing it under review. The ongoing review of SuperMicro’s financial accounts and internal policies created uncertainties regarding the company’s future.
