Super Micro Computer: Still Too Many Issues To Reckon With

Summary:

• Fundamentals deterioration and balance sheet quality are a concern as the company has net debt, negative cash flows, and is losing business from key customers such as NVIDIA.
• Super Micro Computer’s private capital raise is likely to occur at a discount to market price, putting further pressure on the stock.
• SMCI’s new auditor BDO (after the resignation of EY) has a patchy record with an audit deficiency rate of 86% in 2023, according to the Public Company Accounting Oversight Board.
• Valuations are near fair value, but the reliability of such analysis is undermined when the integrity of financial statement reporting is under question.
• A sideways rollover period is likely in the technical charts of SMCI vs. SPX500.

Performance Assessment

I last covered Super Micro Computer (NASDAQ:SMCI) in early Aug. ’24, before the company got into the current mess it is in as accounting debacles, justice department probes, filing delays, and

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