Super Micro Computer (SMCI 2.17%) stock got hit hard over the last week of trading. The company's share price ended the period down 28.6% from last Friday's market close, according to data from S&P Global Market Intelligence.
NASDAQ: SMCI
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On Tuesday, Hindenburg Research published bearish coverage and alleged that Supermicro was a serial offender when it came to bad accounting practices. The short-seller also raised other concerns about the strength of the business. Just one day later, the server specialist announced that it was delaying the filing of its annual 10-K report with the Securities and Exchange Commission (SEC).
Supermicro's filing delay added weight to Hindenburg's report
With its short note, Hindenburg stated that it had found evidence of new accounting manipulations by Supermicro. The report highlighted $983.1 million in payments made over the last three years to private companies owned by brothers of Supermicro CEO Charles Liang as being suspicious. The company previously had significant accounting scandals in 2018 and 2020.
Hindenburg also said that it believed the server specialist was guilty of evading sanctions imposed by the U.S. government. Supermicro's high-performance rack servers use advanced processors from Nvidia that are prohibited from being exported to China, and reports have suggested that the server company has continued to sell these technologies to Chinese customers.
Just one day after Hindenburg's report was published, Supermicro said it was delaying its 10-K filing to complete an assessment of the design and operating effectiveness of its internal controls over financial reporting. The company did not provide a timing window as to when the 10-K filing might be submitted.
Wall Street doesn't like Supermicro's uncertain outlook
In a note published Wednesday, Wells Fargo maintained an equal-weight rating on Supermicro but lowered its price target on the stock from $650 per share to $375 per share. The firm's analysts cited uncertainty about the company's revenue picture and previous history with accounting problems as reasons for the target cut.
The next day, Bank of America (BofA) lifted its rating on Supermicro and shifted its status on the stock to under review. Citing the review of the company's financials and internal oversight processes, BofA's analysts said that they were unable to get a read on Supermicro's fundamentals.
