Super Micro Computer Inc. experienced a sharp decline in shares this week. The decrease in stock came after the sudden resignation of its accounting firm, Ernst & Young. Supermicro is an American information technology company, aiming to deliver “first-to-market innovation for Enterprise, Cloud, AI, Metaverse, and 5G Telco/Edge IT Infrastructure,” per its website.
Learn what happened with Super Micro’s stock, below.
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— Supermicro (@Supermicro_SMCI) October 28, 2024
What Happened to Super Micro Computer’s Stock?
On October 30, 2024, SMCI’s shares tanked by 30 percent. The company disclosed that its accounting firm and auditor, Ernst & Young (EY) had resigned.
Why Did SMCI’s Shares Decline?
A precise reason for the downfall in shares has not been unveiled. However, multiple outlets reported that EY’s resignation as SMCI’s auditor came amid the company’s financial downturn.
“We are resigning due to information that has recently come to our attention which has led us to no longer be able to rely on management’s and the Audit Committee’s representations and to be unwilling to be associated with the financial statements prepared by management, and after concluding we can no longer provide the Audit Services in accordance with applicable law or professional obligations,” EY said in a statement, obtained by Yahoo! Finance. The accounting firm quit SMCI while conducting its audit for the company’s fiscal year, which ended in June 2024.
In response to EY’s resignation, Super Micro wrote that it “disagrees” with the firm.
“The Special Committee has not yet obtained all information relevant for the review and has not concluded the review,” Super Micro wrote, according to Yahoo. “Nevertheless, the company has taken the concerns expressed by EY seriously, and will carefully consider the findings of the special committee and any remedial or other actions recommended by the special committee following conclusion of the review.”
Two months before SMCI’s stocks plummeted, Hindenburg Research published a report in August, alleging “accounting manipulation” at the technology company.
Per Hindenburg, it conducted interviews with former staff members, industry experts and reviewed various records, allegedly indicating “glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.”
Inside SMCI’s Earnings
After Hindenburg released its review of SMCI, Super Micro delayed filing its fiscal report in August 2024. However, after releasing its report, Super Micro reported net sales of “$5.31 billion versus $3.85 billion in the third quarter of fiscal year 2024 and $2.18 billion in the same quarter of last year.”