SMCI: Super Micro Stock Drops as Short Seller Hindenburg Flags Shady Accounting

Super Micro got so much growth it had to give some back. Hindenburg slammed shares but maybe not as bad as it wanted to.

• Super Micro Computer stock SMCI got slapped with a damning report from a company boasting a formidable reputation. Hindenburg Research, an activist short seller who digs out dirt about public companies, released “fresh evidence of accounting manipulation” and said that Super Micro dealt in some sketchy sanctions evasion. Shares of the server maker fell 8% on Tuesday but pared back the loss to 2%.
• Hindenburg, which also targeted Carl Icahn’s hedge fund IEP, “found glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.” As is tradition, Hindenburg had loaded up its short position for an undisclosed amount before the report’s release. The short selling firm said the investigation took three months of researching and interviewing former employees.
• Super Micro is one of the biggest AI plays out there. But before AI was a thing (think early 2023) shares of the company were going for $80. Now, they change hands for about $550 and hit an all-time high of nearly $1,200 a piece, valuing the once small-cap player at $60 billion. Super Micro got in the limelight when it was tapped by Nvidia NVDA to help build its powerful AI servers. It even became the S&P 500’s top performer for the first six months of 2024.