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The timing could not have been worse. In what is now being interpreted as a validation of sorts for the recently released short research report against it, Super Micro Computer (SMCI) shares are crashing today after the manufacturer of high-performance servers withheld a critical regulatory filing to allow for additional internal scrutiny of its financial reports.
To wit, Super Micro Computer released a press statement just moments ago, announcing that "it will not timely file its Annual Report on Form 10-K for the fiscal year ended June 30, 2024 ..."
The statement goes on to note:
"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."
The fallout from this shock development is patently clear, with SMCI shares down nearly 20 percent at the time of writing.
Hindenburg Research's Short Report Against Super Micro Computer
As mentioned earlier, today's development comes merely a day after Hindenburg Research - a prolific short-seller with a stellar record of taking down shady firms such as Nikola Motors - published a hard-hitting report against Super Micro Computer, alleging among other things:
- The SEC charged SMCI for "widespread accounting violations" in 2020, resulting in a $17.5 million settlement. However, the company re-hired top executives responsible for those violations within a three-month period.
- This re-hiring of fired executives resulted in a lawsuit that was filed in April 2024, asserting that Super Micro Computer restarted its improper revenue recognition practices just three months after reaching a settlement with the SEC.
- To meet stringent sales-related benchmarks, SMCI sales team allegedly stuffs its distribution channel to the proverbial gills by pushing products to distributors based on artificially inflated demand forecasts and purportedly implements partial shipments to inflate the total shipment count.
- Super Micro Computer's CFO, who was fired in 2018 after the company was delisted, was later re-hired by an entity that is owned by the brother of SMCI's CEO.
- SMCI has paid nearly a billion dollars over the past three years to non-arm's-length suppliers such as Ablecom and Compuware.
- "~99.8% of Ablecom’s exports to the U.S. since 2020," and "~99.7% of Compuware’s U.S. exports" were to Super Micro Computer.
- In 2006, SMCI pleaded guilty to a felony count for exporting banned components to Iran.
- The company has also reportedly violated US curbs against Russia.
So, why do these allegations matter? Well, for one, SMCI is NVIDIA's third-largest customer.
If your third largest customer is committing fraud, is that bullish???
Nvidia $NVDA
Super Micro Computer $SMCI pic.twitter.com/pvwn1pFsPt— Lawrence McDonald (@Convertbond) August 28, 2024
As per financial records, NVIDIA recently earned around 9 percent of its revenue from Super Micro Computer.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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