Shares of Super Micro Computer (NASDAQ:SMCI) saw a significant increase of nearly 11% in premarket trading on Monday following reports that the company is preparing to submit a proposal to maintain its listing on the Nasdaq Stock Market.
This development comes amid ongoing regulatory challenges and other issues affecting the server manufacturer, which has garnered attention due to its critical role in the booming artificial intelligence sector. A source close to the company revealed to Barron’s that Super Micro aims to present a compliance plan by today, a crucial step to avoid delisting after facing delays in financial reporting and the resignation of its auditor.
In September, Super Micro received a warning regarding delisting, which stipulated that the company must either submit its overdue financial reports or present a compliance plan by November 16.
The situation marks a notable shift for Super Micro, which had previously experienced remarkable growth. In March, the company’s stock surged by 318% during the year, primarily driven by its leadership in AI technology. Currently, however, its shares have declined by 33% year-to-date.
Following the news of the proposed compliance plan, analysts at Lynx Equity Strategies stated that this move was anticipated, especially since the Chief Financial Officer had indicated similar intentions during a recent earnings call. Although they noted that a formal announcement from SMCI regarding the plan had not yet been made public, they believe that the potential for delisting may already be reflected in the stock’s pricing.
Lynx’s analysts consider the stock to be undervalued at its current level, estimating a price target of $45 per share. They suggest that it may take only a few positive news headlines for the stock to undergo a rapid turnaround, reflecting an optimistic outlook despite the current challenges.
This scenario demonstrates how companies can navigate difficult waters, and provides hope that a well-structured compliance plan can revitalize investor confidence.