Super Micro soars after internal review finds no management misconduct
Shares have doubled since mid-November, but are still down about 70% from their peak.
Shares of Super Micro Computer are spiking after the embattled former AI darling said an independent investigation found no evidence of accounting irregularities. Nonetheless, management is following all the recommendations of the special committee formed to investigate claims raised by its former auditor and a short-selling research firm, including replacing its chief financial officer and appointing a chief accounting officer to bolster its governance.
However, the internal review did also find some “lapses” related to the rehiring and monitoring of employees who had left the company amid a previous investigation into its accounting.
The stock is the best performer in the S&P 500, up double digits as of 9:45 a.m. ET.
Super Micro is up year to date about as much as the benchmark US stock gauge — but down about 70% from its mid-March peak. A rose-colored-glasses thesis for the company would look a little something like this: the accounting issues don’t appear to be snowballing, the firm is taking the necessary steps to stay on the Nasdaq, it’s still in the AI business (and that business is booming!), and the stock is considerably less expensive than it was at its peak.
“Among its findings, the independent Special Committee determined that the resignation of the Company’s former registered public accounting firm, Ernst & Young LLP (“EY”) and the conclusions EY stated in its resignation letter were not supported by the facts examined in the Review, the Special Committee’s interim findings reported to EY on October 2, 2024, or the Special Committee’s final findings,” according to the press release.
A more cynical view would look something like: the accounting issues aren’t fully behind it while a reported Department of Justice investigation lingers, and “the new accountants we hired said the old accountants that quit were wrong” is not exactly the cleanest bill of health.
One interesting revelation from Super Micro’s press release is how aligned the questions raised by its former auditor and the short-selling research firm turned out to be. Ernst & Young highlighted concerns about specific transactions with regard to revenue recognition and skirting export controls — two issues that were raised by Hindenberg Research in its late August report.
