One of the most volatile stocks in recent months has been Super Micro Computer (SMCI -1.60%). The company is in the business of providing solutions for the massive data center computing power needed in the artificial intelligence (AI) field.
After soaring more than 300% early in the year, Super Micro faced scrutiny about its accounting practices, and the stock plunged. But it has been rebounding strongly this week as some of the accounting questions are getting answered. Week to date, Super Micro stock has jumped by 27.5% as of late Thursday, according to data provided by S&P Global Market Intelligence.
Super Micro takes a step forward
The stock soared this week after the company released a highly anticipated report from an independent committee assigned to investigate accounting questions raised by both a short-seller and its former auditor.
Ernst & Young (EY) resigned as Super Micro’s auditor in late October with a scathing comment that it was “unwilling to be associated with the financial statements prepared by management.” That sent shares crashing as EY was in the midst of investigating concerns it had about management’s governance, transparency, and internal financial controls.
Several weeks later, Super Micro said it hired a new audit firm, and the committee assigned to look into EY’s concerns released initial findings that indicated some valid concerns but no fraud on the part of management.
That committee completed its review this week, providing investors with details on what it has found, including recommendations moving forward. Those findings confirmed that it did not find reasons to restate prior financials reported, and the stock took off.
While that appears to be good news, especially as sales continue to grow rapidly, it doesn’t mean all is well at Super Micro. The company still needs to officially file the delayed annual report from its fiscal 2024 period ended June 30 as well as the fiscal 2025 first-quarter report.
Super Micro’s new audit firm has yet to sign off on those financials, though, and that is what will be needed for investors to really regain trust in the company.
Howard Smith has positions in Super Micro Computer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
