Last week, Super Micro announced in a filing that Ernst & Young had resigned. EY said it could “no longer” rely on management’s and the Audit Committee’s representations and didn’t want to be associated with the financial statements prepared by management. At the time, Super Micro said it disagreed with EY’s decision and is working to find a new auditor.
On Tuesday, Super Micro said its independent “Special Committee” formed by the board of directors and led by independent counsel found “no evidence of fraud or misconduct on the part of management or the Board of Directors.”
Needham analysts led by N. Quinn Bolton suspended their rating on the stock saying they are awaiting a new auditor and 10-K filing, adding that the resignation of E&Y was a “significant concern.”
Super Micro has been under increased scrutiny for its accounting since an August report from short seller research firm Hindenburg Research said it “found glaring accounting red flags.” Later in August, the company said it would delay filing its form 10-K for the fiscal year ending June 30.
After falling 55% in the last three months, Super Micro shares are now down 3% in 2024, compared with a 23% gain for the Nasdaq Composite as of Tuesday’s close.
There is “minimal trust in the company’s reported financials and guidance,” Susquehanna analyst Mehdi Hosseini wrote in a note Monday. Hosseini suggested Super Micro revamp the company’s board of directors and hire a reputable auditor to regain the trust of investors.
