Super Micro Computer (NASDAQ:SMCI) was trading near record highs when it joined the benchmark S&P 500 (SP500) in mid-March, but shares of the IT hardware maker have steadily lost 60% of their value since, adding another chapter to what has been a turbulent year for the stock.
The company’s shares closed at $1,068.83 on the final trading day before the stock’s inclusion in the index on March 18. On Wednesday, it ended at $423.47, marking a loss of 60.4% in that time period. SMCI was last down 2.3% on Thursday.
The stock saw a stratospheric rise in the first three months of this year, as the San Jose, Calif.-based firm’s capabilities in making artificial intelligence (AI) servers and serving as a gauge for overall AI demand made it an investor-darling. Shares of the company advanced a whopping 332.3% from December 29, 2023, to its 52-week record intraday high of $1,229.00 notched on March 8.
But since the company’s addition to the benchmark S&P (SP500) soon after that, the story has taken a largely negative turn. Despite its subsequent quarterly results showing immense Y/Y revenue growth, investors have been concerned over its margins.
Things have become even gloomier recently. Last Tuesday, famed short-seller Hindenburg Research took aim at the company. The next day, SMCI said it would delay its annual 10-K filing to the US Securities and Exchange Commission (SEC). That announcement led to a steep decline of 19% in the stock.
SMCI Chief Executive Charles Liang two days ago told customers and partners in a letter that neither the delay nor Hindenburg’s short would have an impact on the company.
“Neither of these events affects our products or our ability and capacity to deliver the innovative IT solutions that you rely on every day,” Liang wrote in the letter, which was also filed with the SEC. “Our production capabilities are unaffected and continue operating at pace to meet customer demand. Our world class engineering and support teams are also unaffected and continue to build and deploy large scale AI Total Solutions.”
He added that the company is “well-positioned” to deliver its products to its customers and help them meet their IT needs.
SMCI last Friday said it does not expect material changes to its fiscal 2024 despite the filing delay.
However, Barclays yesterday downgraded SMCI to Equal-Weight from Overweight and cut its price target due to uncertainty over the company’s AI margins and internal controls. Analyst George Wang cited “limited visibility on forward AI server gross margin trends, customer erosion, weaker competitive positioning, and higher working capital requirements” as the catalyst for the brokerage’s changes.
