During a generally quiet period in the market – Thanksgiving – one deeply troubled stock made an unexpectedly large downward move – Super Micro Computer (NASDAQ: SMCI).
Specifically, around 8:30 AM EST on November 29, SMCI shares plunged 10% within minutes, only to partially rebound and form something of a cup-and-handle pattern, leading them to their press time price near $32, per the data retrieved from Robinhood (NASDAQ: HOOD) on Friday.
Though there is no clear indication of why the move occurred, some investors have taken it as a major ‘buy the dip’ opportunity, while others – as evidenced by the overall downward direction – believe the decline will only deepen.
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Why SMCI stock is collapsing in 2024
The downward shock comes only about 10 days after Supermicro shares received a boost from the company finding a new auditor – BDO USA, P.C.
On November 19, SMCI stock began rallying on the news of the imminent announcement and gained approximately 30% in a single day.
The rally came after a series of bad news caused extensive damage to Super Micro Computer’s reputation and valuation.
In August, Supermicro delayed its annual and quarterly filings with U.S. regulators and the alarm bells entered a ringing frenzy as Hindenburg Research published a scathing report on the firm’s alleged malpractices while announcing a short position.
The damage was only worsened when SMCI’s former auditor – Ernst & Young – not only resigned, but also published a dire and uncharacteristically strongly-worded letter in the process.
Finally, Supermicro stock – once hailed as one of the best performers in the 2024 market – came under even more pressure as talk of delisting from Nasdaq became commonplace.
Still, it is worth pointing out that, despite the woes, most Wall Street experts have refrained from downgrading SMCI shares to ‘sell,’ instead opting to assess them as ‘neutral’ simultaneously citing the current issues and confidence in a recovery.
SMCI stock price analysis
Whatever SMCI stock’s next moves ends up being – and whether the most recent stutters prove a setup for a rally, or a final pause before an even greater plunge – there is little doubt Supermicro shares have fallen sharply since summer.
The six-month chart shows Super Micro Computer securities are 61.97% in the red, with the 35% fall in the last 30 days being particularly pointed, despite the November 19 spike.
Furthermore, the collapse following the delays, the damning reports, and equally damning rumors has ensured that year-to-date (YTD), SMCI stock is up only 11.84% – on May 13, this figure stood at 316.15%.
Featured image via Shutterstock
