Shares of Super Micro Computer are down over 15% heading into the cash open after the server company said it would be delaying its 10-K filing for FY 2024. The delay comes one day after short seller Hindenburg Research alleged "fresh evidence" of accounting manipulation at the company.
"Additional time is needed for SMCI’s management to complete its assessment of the design and operating effectiveness of its internal controls over financial reporting as of June 30, 2024," a filing from the company read.
Yesterday shares plunged as much as 8% but finished the session only down 2%. Will they repeat the BTFD trend today...
In a report released on its website Tuesday morning, the short seller alleged that the semiconductor/server company, which has seen its stock skyrocket over the last few years during the AI bubble, could be engaged in accounting manipulation and self dealing among family members.
Among other points, Hindenburg wrote:
"Beyond fresh questions around its revenue accounting, we found that Super Micro’s relationships with both disclosed and undisclosed related parties serve as fertile ground for dubious accounting," the report says.
"For example, disclosed related party suppliers Ablecom and Compuware, controlled by Super Micro CEO Charles Liang’s brothers, have been paid $983 million in the last 3 years. Ablecom is also partly owned by Super Micro CEO Charles Liang and his wife."
It continues: "The relationships seem oddly circular. Super Micro provides components to the entities which assemble them and sell them back to Super Micro. They also rent warehousing and factory space to Super Micro even though it has its own sprawling factory."
"Multiple former employees and channel partners confirmed that after-sales service is undermining Super Micro’s ability to retain customers. One former salesperson said: 'It’s their Achilles heel. It’s just horrible.'," Hindenburg wrote.
"All told, we believe Super Micro is a serial recidivist. It benefitted as an early mover but still faces significant accounting, governance and compliance issues and offers an inferior product and service now being eroded away by more credible competition," the report says.
You can read the full report here.