Shares of Super Micro Computer Inc. (SMCI) suffered their worst single-day loss since… August 7, 2024. That’s right, Super micro shares have now suffered two single-day 20% losses in the month of August.
The early August decline was the result of the company’s weaker-than-expected earnings results. While painful, the pullback was still captured by the stock’s 20-month moving average keeping shares in a long-term bull market trend.
Today’s sell-off was the result of two stinging headlines.
First, the company was the target of a short selling report from Hindenburg Research.
The report, released Tuesday, states several issues with SMCI’s reporting, alleging that had uncovered “fresh evidence of accounting manipulation.”
News of the short report was followed this morning by a filing statement from Super Micro Computer’s management stating that ″SMCI is unable to file its Annual Report within the prescribed time period without unreasonable effort or expense,”.
The company also reported that “Additional time is needed for SMCI’s management to complete its assessment of the design and operating effectiveness of its internal controls over financial reporting as of June 30, 2024.”
The near-simultaneous timing of the report and SMCI’s delayed reporting shook investor’s confidence in the company, sending the stock more than 25% lower at it’s low of the day.
Shares of SMCI did see some late buying interest after the stock bounced from its long-term bullish trend as indicated by the stock’s 20-month moving average.
Investors looking to “buy the dip” may want to take a wait-and-see outlook on the stock.
Analysts from JP Morgan were quick to challenge claims made by Hindenburg, noting that the report seemed “largely void of details around alleged wrong doings from the company.”
That aside, the stock is hovering just above its $400 level and the previously mentioned 20-month moving average. A break below this price is likely to target further declines that may extend as low as $250.
Shares of Salesforce.com (CRM) are trading higher after the close after the company's better than expected earnings report.
The company reported revenue that grew by 8.5% year over year. That was better than analysts’ expectations. Earnings per share for the quarter were $0.21 better than expectations, coming in at $2.56 per share.
Salesforce.com guided their fiscal year 2025 earnings per share above consensus estimates, while revenue estimates remain in line with expectations.
Investors have been waiting for some confirmation that the company could follow with a positive quarter after the company guided expectations lower last quarter.
Salesforce.com’s stock has been trading just below its 200-day moving average since early July as investors have been buying, just not at an accelerated pace.
Today’s move should give the stock momentum to move above the popular trendline, which will attract technical buyers to the stock.
Both the stock’s 20- and 50-day moving averages are in bullish trends below the current price, adding to the positive technical outlook for the stock.
Shares of Salesforce.com maintain a bullish outlook with a target price of $350.
Despite reporting better-than-expected results after Wednesday’s close, NVIDIA (NVDA) shares were 6% lower in after-hours trading.
The company posted 122% revenue growth for the quarter, beating analysts’ expectations, but not matching the 262% growth seen last quarter.
Earnings per share beat expectations by $0.03, also a smaller percentage beat that the company was able to show last quarter.
Management guided their third quarter revenue estimates higher as sample shipments of Blackwell – the company’s next generation product – are on their way to customers. The company also announced a $50 billion for share repurchase.
The Street’s less-than-enthusiastic response to NVIDIA’s positive earnings report is a simple case of the stock having been “priced for perfection”.
Narrowing earnings per share and revenue “beats” indicates that the company may be seeing a crescendo in its incredible growth trend.
In no way does this transition make NVIDIA an unattractive stock, it just means that investors will have to go through a resetting of expectations, which will mean some growing pains for the stock.
Important price levels to watch over the next week include $120 and the stock’s 50-day moving average.
A break below the $120 price will put the stock back in the hands of sellers as it would represent a shift back below the stock’s 50-day moving average.
The last break below this critical trendline resulted in a short-term selling spree that took shares to a low just above $90.
NVIDIA’s 200-day moving average is set in a bullish trend just below that critical $90 price, meaning that the stock should find strong support in this price region.
NVIDIA maintains a bullish outlook with a price target of $175.
