Of all the memorable events in the financial markets that have marked 2024 thus far, the saga of Super Micro Computer (NASDAQ: SMCI) was perhaps the most unexpected.
SMCI stock benefited greatly from the ongoing artificial intelligence rally. At the beginning of the year, a single Super Micro share was worth $28.55 —then, the price reached a yearly high of $118.81 in mid-March.
In the following two quarters, this 316.14% rally did not continue — Super Micro shares receded to a price of $54.76 by August 26. Then, a day later, notorious short-selling activist group Hindenburg Research released a report alleging widespread accounting malpractice.
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Following the report, SMCI stock traded between $38.65 and $49.12 — and just when it seemed like this would be a rare miss on the part of Hindenburg, it became public that the company’s auditor, Ernst & Young (EY) had resigned. Prices plummeted to just $18.01 in short order.
Since then, the business has found a new auditor, announced sweeping changes in leadership, and SMCI stock recovered to $40.54 at press time. However, on December 10, shares of SMCI saw an 8.20% crash — and in the premarket trading session, prices went as low as $38.99, bringing the combined decrease to 11.70%.
SMCI stock falls on index fears
First, let’s begin with the good news — on December 6, the NASDAQ exchange granted the server maker an extension to file its delayed reports. Super Micro Computer has a new deadline — February 25, 2025, by which it must file its Form 10-K and Form 10-Q from June and September, respectively.
While positive, this was to be expected after NASDAQ accepted the company’s proposed plan for regaining compliance.
In tandem, although such changes do bring about a certain degree of uncertainty, the naming of former company vice president of finance, Kenneth Cheung as the new chief accounting officer, as well as the announced intention to name new personnel to the positions of general counsel, chief compliance officer, and chief financial officer, was largely seen in a positive light.
There is one probable cause here — on December 13, the NASDAQ-100 index will most likely go through its annual reconstitution. SMCI stock could have dropped on account of the possibility that the business could be replaced — most likely by high fliers Palantir (NASDAQ: PLTR) or MicroStrategy (NASDAQ: MSTR).
Elsewise, investors who bought the dip may be simply cashing in and securing their gains, as Super Micro stock prices have seen a 125.09% increase from their lowest point in mid-November.
Featured image via Shutterstock
