Super Micro Computer (SMCI) shares are trading higher again today as the company dropped good news on investor’s desks.
This morning, Super Micro announced the findings of its special committee’s audit.
The findings by Cooley LLP and forensic accounting experts from Secretariat Advisors, LLC, reported no evidence of misconduct by management or the Board of Directors.
Most importantly, the company will have no restatement of financials.
The news follows a rough November for one of NVIDIA’s biggest partner companies.
At the heart of SMCI's recent drama was the potential for NASDAQ delisting. The delisting was averted in November as Super Micro’s management delivered plans to meet the NASDAQ’s financial reporting requirements.
That fear of delisting was triggered in October when the company's auditing firm resigned, delaying financial disclosures.
This isn't SMCI's first dance with delisting concerns. Super Micro was previously delisted in August 2018 due to delays in financial reporting.
Super Micro Computer is still reportedly under investigation.
The U.S. Department of Justice (DOJ) is probing the company for potential accounting irregularities and other compliance issues.
The investigation was sparked by allegations from the short-selling firm Hindenberg Research, which highlighted concerns about Super Micro's financial practices and governance.
The report from Hindenberg accused the company of various misconducts, including questionable revenue recognition practices and dealings with related parties that were not properly disclosed.
The allegations have led to significant scrutiny and have impacted investor confidence, reflected in a notable decline in SMCI's stock price following these revelations
Investors are looking beyond the last month’s selling, trying to grab a piece of the AI giant’s stock while they trade at relative value to their 2024 highs. SMCI stock is still trading 66% lower than its highs near $125 traded in March.
SMCI shares moved quickly above a their key 50-day moving average for the first time since late October.
In October, the stock had a brief stint above the 50-day mark but succumbed to selling pressure at that price, eventually retreating to $20. Now, the stock has impressively doubled from its November lows.
Today's rally is also marked by SMCI breaking above its top Bollinger Band, a move typically seen as a precursor to higher prices.
However, investors remain cautious, mindful of potential resistance at $50. A breach of this level could unleash a wave of profit-taking, potentially driving the price down to $40 in the coming weeks.
Looking ahead, the company’s next earnings report, tentatively scheduled for February 4, 2025, is eagerly anticipated.
This will be a critical moment for SMCI, as good news could firmly reestablish a bullish trend. However, investors should brace for volatility, with SMCI likely to remain at the mercy of market sentiments and news flow.
First and foremost, keep in mind that this is still a speculative trade at any level.
The company is still under a DOJ investigation and any bad news from that front will turn the stock back to its November lows.
Keep in mind that time is still on long-term investor’s side when it comes to SMCI.
