Shares of Super Micro Computer (NASDAQ:SMCI) experienced a nearly 11% increase in premarket trading on Monday, following reports that the company is set to propose a plan to retain its listing on the Nasdaq Stock Market.
This development comes amidst regulatory scrutiny and significant obstacles facing the server manufacturer, which has played a pivotal role in the burgeoning artificial intelligence sector. According to an insider speaking to Barron’s, Super Micro intends to submit its compliance plan by Monday. This action is crucial for the company to avoid delisting from Nasdaq due to its overdue financial filings and the recent departure of its auditor.
In September, Super Micro received a warning about potential delisting, compelling the company to either file its outstanding reports or offer a compliance plan by November 16.
The current challenges for Super Micro highlight a remarkable contrast to its earlier success. In March, its stock soared 318% for the year, driven by its strong market position in AI computing. However, the situation has changed dramatically, with the stock now down 33% year-to-date.
Following the news from Barron’s, analysts at Lynx Equity Strategies noted that the plan’s submission should not be surprising, as the Chief Financial Officer had previously indicated this during a recent earnings call. They clarified, however, that as of the report’s publication, they had not received any formal confirmation from Super Micro about the plan submission.
Despite the uncertainties, Lynx Equity Strategies suggested that the potential for delisting has likely already been reflected in the stock’s current price. They anticipate that short-sellers who reacted to a previous short-seller report may begin to cover their positions soon. The firm views the stock as significantly undervalued, stating that it might be only “a couple of headlines away from a rapid reversal,” with a price target of $45 per share.
In summary, while Super Micro faces challenges in maintaining its Nasdaq listing, there is a sense of cautious optimism from analysts about the potential for recovery in its stock price. If the company successfully presents its compliance plan and addresses the issues at hand, it may well reclaim the momentum it once enjoyed in the AI space.