Super Micro Computer Inc. (NASDAQ: SMCI), plunged again by more than 12% on Monday after a report that the company is considering raising capital through stock and bond sales.
Stock sales are considered a negative by existing shareholders because they dilute their stakes in a company.
Plus, these offerings tend to lower the EPS of a company as well.
Why? Why?
Supermicro’s stock is down by close to 30% from its recent high.
Why has Supermicro’s stock increased in recent weeks?
Super Micro Computer is planning to raise fresh capital in order to improve its financial standing.
Bloomberg reported on Monday that people who spoke to them under condition of anonymity said the expected offering would include both bonds and shares.
SMCI has not yet commented on the report.
Supermicro has confirmed that an internal investigation did not reveal evidence of financial malpractice.
It has until February 25 th if it wants to file any pending results at the Securities & Exchange Commission. This effectively eliminates the possibility of delisting.
Investors are still wary about SMCI’s shares, as the company has yet to release its financials.
There is still some uncertainty.
Supermicro does not pay out a dividend to calm their nerves.
JPMorgan expects SMCI to fall by $23 per share.
JPMorgan analysts remain pessimistic about the company’s customised AI servers, despite a few positive developments in recent weeks.
The investment firm warns that SMCI’s stock could fall another 25% from here.
JPMorgan reiterated last week its “underweight rating” on the artificial intelligence company following a meeting it had with its management.
The bearish view of Supermicro is especially interesting, considering that the company has largely ignored recent reports that claim it is struggling with a loss of material orders.
The Nasdaq-listed company is on track to increase production at its Malaysian facility in the second half of fiscal 2025.
Analysts at JPMorgan say that if Super Micro Computer fails in its filing deadline or revises its previous results significantly, the stock price of Super Micro Computer could suffer another crash.
Is Super Micro Computer a good investment?
Note that Super Micro Computer reportedly is exploring whether private equity firms would be interested in the new bonds and shares it plans to issue.
Bloomberg reports that the company’s fundraising campaign is still in its early stages and it could decide to reject it.
Supermicro’s stock price could fall again in the next few weeks if it proceeds with raising new capital.
This post Supermicro’s 12% loss again is due to its inability to pull itself together appeared first on The Invezz
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