To this day, investors in the S&P 500 index around the world have not yet received an explanation from data center server manufacturer supercomputers - why AI concept stocks, which once rose dramatically, will face the dilemma of being delisted from the exchange for the second time in five years after entering the S&P 500 index for eight months.
According to the rules of the NASDAQ exchange, Supermicro Computer must submit an audited 10-K annual report or a compliance plan to the exchange before November 18th. The theoretical deadline is the 16th, but according to exchange rules, if the last day is a weekend, it will be postponed until the end of the next trading day.
Supermicro Computer was included in the S&P 500 index before its opening on March 18th this year, and since then, its market value has evaporated by over 80%.
(Ultracomputer daily chart, source: TradingView)
Company response: Take all necessary measures as soon as possible
Regarding the fact that the deadline is approaching, a spokesperson for Supermicro Computer responded on Friday, saying, "As we have previously disclosed, Supermicro Computer intends to take all necessary measures as soon as possible to meet Nasdaq's requirements for continued listing
In the past few months, Supermicro Computer has been hit by short selling by Hindenburg, delayed submission of audit annual reports as of June 30th, and investigations by the US Department of Justice. To the shock of investors, the company's auditor Ernst&Young resigned in October and publicly expressed concerns about the company's governance and transparency. Supermicro Computer announced this week that it is unable to submit its 10-Q report as of September 30th in a timely manner.
Supermicro Computer also revealed that the review committee established by the board of directors has completed an investigation into the concerns raised by Ernst&Young, and although there are other ongoing work, it is expected that the review will be completed soon.
Regarding the current situation, Wedbush analyst Matt Bryson explained that regardless of the outcome, it is likely to affect the company's plans to hire new auditors and submit financial reports. Bryson stated that he would not be surprised by any developments in the coming days.
What will happen next?
At present, if Supermicro Computer can submit its compliance plan on the 18th and obtain approval from the NASDAQ exchange, the deadline for the company to submit its audited financial report for the previous fiscal year will be relaxed to February next year.
If Supermicro Computer is delisted from NASDAQ, in addition to the high probability of being kicked out of the S&P 500 index, it will also face early repayment of $1.725 billion in bonds.
What makes investors uneasy is that Supermicro Computer has not been delisted for the first time. In 2019, the company was delisted from the NASDAQ exchange for failing to submit its annual report and several quarterly reports on time. In 2020, Supermicro Computer reached a settlement agreement with the SEC regarding accounting issues and returned to the NASDAQ exchange after meeting compliance conditions.
Bryson said that he has never seen the same company experience the same problem twice, and he really doesn't know how this will affect what happens next.
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