Super Micro Computer Inc. (NASDAQ: SMCI), has disappointed its shareholders in the year 2024.
The last six months have seen a continuous stream of bad news for the artificial intelligence company, which was once hailed as a superior choice to Nvidia.
The fourth quarter earnings were disappointing, followed by the Hindenburg short-report, which was filed after a delay of filing the 10-K. Most recently, there has been talk of a DOJ probe.
If you already own Supermicro stock, it might be wise to hold on to it and not sell it in a panic.
The sale of Supermicro shares may be overdone
Super Micro Computer is still in a good position for long-term success despite recent challenges.
Hindenburg did indeed cite accounting fraud when it disclosed its short position in Nasdaq listed firm last month, which scared many investors. But SMCI already refuted this accusation, calling it “false or incorrect”.
The AI server company has also eased concerns about the annual report delays, saying that it does not expect material differences in earnings. The Hindenburg news has been a case of “he said/she said” so far.
The US Justice Department has yet to confirm it has launched a probe on Supermicro – but even if they do, an investigation would not automatically make SMCI a suspect.
As is evident, a large part of the loss in Supermicro’s stock over the last six months (more that 65%) can be attributed to hearsay rather than facts.
Stock of Supermicro could rise after 10-for-1 split
Super Micro Computer’s shares are worth buying after the massive rip-off. Its management has also announced plans for a 10-for-1 split of its stock that is scheduled to go live on 1 October .
Stock splits have historically been a positive for investors, as they make the shares of a firm more accessible to retail investors. According to a recent report, stocks have outperformed benchmark indexes in the 12 month period following the split since 1980.
While past performance does not always guarantee future returns for investors, if Supermicro stocks do end up following tradition, they may be in store for a treat by 2025.
If you already own Supermicro stock, it might be worth holding on to it. If you’re looking to build a position, it might be better to wait until the DOJ news is released in the coming weeks before making any moves.
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