Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Super Micro Computer shares tumble on Spruce Point short report

Published 01/10/2023, 11:26 AM
Updated 01/10/2023, 11:57 AM
© Reuters.  Super Micro Computer (SMCI) shares tumble on Spruce Point short report

By Sam Boughedda 

Super Micro Computer (NASDAQ:SMCI) shares tumbled more than 9% Tuesday after Spruce Point Capital released a report on the stock, issuing a "Strong Sell" opinion, saying it sees a 40% to 50% downside risk.

Short-selling investment research firm Spruce Point said it has "grave concerns" about the accuracy of SMCI's financial reporting and the sustainability of its recent stock price performance.

"SMCI and its CEO have a troubling history that recently resulted in delinquent filings, financial restatements, and a delisting of its shares," claims Spruce Point. "In 2020, the SEC levied a massive $17.5 million fine and ordered the return of $2.1 million by the CEO for unjust stock sales in what the SEC described as 'widespread accounting violations' tied to revenue and expense recognition."

They also argue that investors are chasing SMCI's "outlandish long-term revenue goals" even when they include related-party revenues and "come from a company with a troubling history known to aggressively push employees to record revenues without proper accounting controls."

The short-selling firm's biggest concern, however, is that SMCI has become reliant on Meta Platforms (NASDAQ:META), which they state is now a 22% customer. The firm adds that Meta itself is struggling and is "already reportedly suspending datacenter capital spending."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.