Liaison took over the "hot potato" audit, and Super Micro Computer's stock price soared
1min read 21st Century Business reporter Kong Haili reports from Beijing
On November 18, Super Micro Computer (SMCI) announced that it had hired BDO USA (Ernst & Young's US firm) as its new auditor and submitted a compliance plan to Nasdaq in support of its request for an extension to remain listed on Nasdaq. The news boosted SMCI's share price, which closed up 15.93% and then soared nearly 40% after the market closed.
November 18 was the last date for SMCI to submit its delayed 2023 fiscal year 10-K annual report or compliance plan to meet Nasdaq's listing requirements. Failure to do so would trigger a series of consequences: the company may be delisted, removed from the S&P 500 index, and required to repay $1.725 billion of bonds early.
SMCI's 10-K annual report must be signed by an auditor, and its original auditor Ernst & Young resigned from the board's audit committee on October 24, directly leading to the company's annual report being delayed.
SMCI had been accused of financial fraud related to related-party transactions by Hindenburg Research, an activist short seller, in an August 28 report. The company was also under investigation by the Department of Justice. These accusations had caused the company's share price to plummet.
It is not common for an auditor to resign in the middle of an audit, and whether a brave auditor will take on the "hot potato" is the most concerned issue for investors.
SMCI submitted its compliance plan on the last deadline, finding an auditor to take over, only giving itself a few months of buffer time. Whether Linkage can complete the audit and give a compliance opinion on time, and whether the 10-K annual report can be submitted on time, still has uncertainty.
It is worth noting that SMCI, which is heavily dependent on Nvidia's GPU chips, has been accused of financial fraud, forcing Nvidia to make a certain "cut" and transfer some orders to other suppliers. In this case, even if it is cleared of suspicion, it will be difficult for SMCI to get saturated orders.
At the same time, SMCI's two competitors in the data center field, Dell Technologies and Hewlett Packard Enterprise, have begun to encroach on its territory, and Musk's largest data center in the world is a common target.
Even with the consecutive rise, SMCI's share price is still far from the $122/share in March, not to mention the need to rebuild people's trust.