Can Super Micro Computer’s Q1 earnings save this sinking ship

Super Micro Computer (NASDAQ:SMCI) is expected to report its first quarter results for the fiscal year 2025 on November 5, Tuesday, as the company faces uphill battles, the latest being the unexpected resignation of its auditing firm.

The consensus EPS Estimate is $0.73 (-78.7% Y/Y) and the consensus Revenue Estimate is $6.44B (+203.8% Y/Y).

SMCI had seen a triumphant start to the year, with the inclusion in the S&P Dow Jones Indices in March, leading to a whopping 317.9% YTD advance at that time. However, the company has, as of today, slumped ~80% from the record high of March 13, as it struggles against mounting challenges.

The firm has seen three consecutive days of losses in the last week.

But Wall Street has soured on SMCI, largely due to specific triggers since the company’s inclusion in the S&P. The deterioration in sentiment has reached a point where the firm is now in danger of being delisted from the Nasdaq.

The firm’s struggles included, a short report on SMCI published by Hindenburg Research, a reported probe by the U.S. Department of Justice into the company, and the resignation of its auditor Ernst & Young LLP.

“The company reported that its auditor has resigned. This is yet another sentiment anchor weighing on the stock,” Seeking Alpha analyst Kumquat Research said.

We are likely to see short interest rise again after this latest filing, which will add to the stock’s volatility and should increase investor caution, Kumquat Research added.

Worries over the information technology hardware manufacturer’s financial statements emerged in late August, when famed short-seller Hindenburg Research said it had found “red flags” and “evidence of undisclosed related party transactions” after a three-month investigation. A day later, SMCI delayed the filing of its annual 10-K report.

The firm also, recently, announced an amendment to its loan agreement with Cathay Bank that, among other things, and extended the date by which the company is required to deliver its annual results.

“I would personally refrain from purchasing SMCI stock in the current situation because of the accounting scandal. It is uncertain whether Super Micro will soon find a new auditor and submit its 10-K form,” Seeking Alpha analyst Anna Sokolidou said.

SMCI’s likelihood of exceeding current forecasts has, in my opinion, noticeably decreased. Additionally, it’s crucial to receive the company’s 10-K, which we have yet to see, Seeking Alpha analyst Danil Sereda said.

The maker of artificial intelligence was also the top loser in the S&P 500 for the third quarter.

Last quarter, Super Micro Computer (SMCI) reported mixed fiscal fourth-quarter results and revenue guidance that topped expectations. SMCI also announced a stock split.

Over the last 2 years, SMCI has beaten EPS estimates 88% of the time and has beaten revenue estimates 88% of the time.

Over the last 3 months, EPS estimates have seen 4 upward revisions and 5 downward. Revenue estimates have seen 7 upward revisions and 0 downward.