Super Micro faces threat of delisting from Nasdaq over compliance issues

Super Micro Computer is facing a potential delisting from the Nasdaq exchange as soon as Monday, due to its failure to comply with Nasdaq regulations. The company has not filed its 2024 year-end report with the Securities and Exchange Commission (SEC) and has yet to replace its accounting firm. This uncertainty has left investors seeking clarity on Super Micro's situation, especially after the company reported preliminary quarterly results that did not provide the expected answers.

Implications of Delisting for Super Micro

If Super Micro does not submit a compliance plan by the deadline, the Nasdaq may proceed with the delisting process. This not only affects the company's stock, but also has the potential to damage its reputation and standing with customers, who may lean towards competitors like Dell or Hewlett Packard Enterprise (HPE) for AI servers. Bernstein analyst Toni Sacconaghi noted that Super Micro's accounting concerns could ultimately benefit Dell in the upcoming quarter. The Nasdaq has given Super Micro a 60-day period to submit a plan of compliance since notifying the company of the delisting risk on September 17. The deadline falls on a Sunday, making Monday the effective date for the submission.

Should Super Micro's compliance plan be accepted by Nasdaq staff, the company may be granted an extension of up to 180 days to file its year-end report. The exchange seeks to understand the actions taken by Super Micro's board of directors regarding the accounting problem, the reasons for the late filing, and a timeline for rectifying the situation. Various factors are considered when evaluating a compliance plan, including the reasons for the delay, upcoming corporate events, overall financial status, and the likelihood of filing an audited report within the specified time frame.

Super Micro's Delisting Situation

The delisting risk has escalated for Super Micro, especially after the company failed to submit its annual report over the summer. Hindenburg Research accused Super Micro of accounting fraud and export control issues, further complicating the situation. The company's auditor, Ernst & Young, stepped down in October, and Super Micro is still in the process of finding a new one. The stock has suffered significantly, plummeting 85% from its peak in March. Shareholders, who initially saw the stock soar over 14-fold from the end of 2022 to the peak, are now facing a stark decline, with the stock trading at levels equivalent to May 2022.

The potential delisting and compliance issues could also affect Super Micro's relationships with customers and suppliers. Concerns over the company's compliance may lead customers to opt for competitors such as Dell or Hewlett Packard Enterprise. The company's head of corporate development, Michael Staiger, reassured investors that Super Micro maintains a strong relationship with his most important supplier, Nvidia, despite the filing delays and challenges.