Super Micro Computer (SMCI) stock fell about 2% Tuesday after a report from short seller Hindenburg Research. Claim, among other things“Accounting manipulation” in the world of artificial intelligence. Super Micro shares fell 8% in premarket trading after headlines about the report.
Hindenburg Research said its three-month investigation “found glaring accounting irregularities, evidence of undisclosed related-party transactions, sanctions and export control failures, 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 did not receive a response from the company as of the time of publishing this article.
The maker of data center servers and management software has captured investor attention this year as it has capitalized on the AI wave. The company buys components from AI chipmaker Nvidia (NVDA).
Super Micro shares rose from $290 in early January to more than $1,200 by March. The stock is down about 50% from its March peak but is still up 90% year to date. The company recently announced a 10-for-1 stock split effective Oct. 1.
In her report, Hindenburg alleged that despite a $17.5 million settlement in August 2020 with the Securities and Exchange Commission following an investigation into “widespread accounting violations,” Super Micro’s business practices had not improved and that senior executives who left amid the scandal were later rehired.
“Almost all of them are back,” the report quotes one former salesperson as saying. “Almost all of the people who were laid off and who were responsible for this breach are back.”
“Even after the SEC settlement, pressure to meet quotas led salespeople to fill the channel with distributors using ‘partial shipments’ or by shipping defective products at the end of the quarter, according to our interviews with former employees and customers,” the report said.
“Overall, we believe Super Micro is a repeat offender,” Hindenburg said in his report.
“The company has benefited from being an early market entrant but still faces significant accounting, governance and compliance issues and offers a lower quality product and service that is now being eroded by more credible competition.”
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