Super Micro Computer (SMCI) The stock fell 2% early Tuesday after a report from short-seller Hindenburg Research asserting, among other things« accounting manipulation » at the number one in AI. Super Micro shares fell 8% in premarket trading following headlines about the Hindenburg report.
Hindenburg Research said its three-month investigation uncovered « glaring accounting red flags, evidence of undisclosed related-party transactions, sanctions and export control violations, and customer issues. » The firm disclosed Tuesday that it had taken a short position in Super Micro.
Yahoo Finance reached out to Super Micro and had not heard back from the company at the time of publication.
The maker of data center servers and management software has attracted investor attention this year as it rode the AI waveThe company buys components from AI chipmaker Nvidia (NVDA).
Super Micro shares have soared from $290 in early January to over $1,200 in March. The stock is down about 50% from its March price, but it is still up 90% year to date. recently announced a 10-for-1 stock split, effective October 1.
In its report, Hindenburg claims that despite a $17.5 million settlement in August 2020 with the SEC following an investigation into “widespread accounting violations,” Super Micro’s business practices did not improve and senior executives who left amid the scandal were subsequently rehired.
The report quotes a former salesman as saying: « Almost all of them are back. Almost all of the people who were fired and who were the source of this malfeasance. »
The report said: « Even after the SEC settlement, pressure to meet quotas pushed vendors to fill the channel with distributors using « partial shipments » or shipping defective products late in the quarter, according to our interviews with former employees and customers. »
« Overall, we believe Super Micro is a serial offender, » Hindenburg said in its report.
« It has benefited from its pioneering status, but it still faces significant accounting, governance and compliance issues and offers an inferior product and service, now being eroded by more credible competition. »
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