Super Micro Computer (SMCI) has halved in value in two days. Ming-Chi Kuo: The chances of the worst outcome are increasing, and mergers and acquisitions cannot be ruled out

The "audit storm" continues to ferment, and the once tenfold rising AI stock is facing the risk of being delisted by the exchange.

Due to questions surrounding corporate governance and ethical integrity, the former AI "meme stock" Super Micro Computer continued its plunge on Thursday, following a 33% drop on Wednesday, with a further decline of over 15% at one point. In just two days, the stock price has nearly "halved" to $29, with a market value dropping to $16 billion, falling below the $18 billion market value threshold of the S&P 500 index.

Tianfeng International analyst Guo Mingqiang analyzed that, based on past experience, the resignation of auditors/accountants is a serious matter, and the possibility of the stock facing suspension or delisting is increasingly high:

"This will indirectly lead to a decline in Super Micro Computer's competitiveness and face more severe survival challenges."

Guo also added that considering Super Micro Computer has good AI server design and manufacturing capabilities, we may see a "major overhaul" of the company's senior management and board, and the possibility of being acquired by other companies cannot be ruled out.

AI Meme Stock "True Colors Revealed"? Super Micro Computer Faces Higher Delisting Risk

Super Micro Computer primarily sells high-performance servers for AI data centers, and the strong market demand for AI servers has been the main driver of its stock price increase.

At the beginning of 2024, Super Micro Computer's stock price experienced a massive surge, reaching $1,229 per share by March 9, setting a new historical high. Over a 12-month period, the stock price increased an astonishing 1,300%, and the company was successfully included in the S&P 500 index.

The investors' frenzy came to an end with a document on Wednesday. According to the 8-K filing submitted by Super Micro Computer on Wednesday, Ernst & Young raised questions about the company's commitment to integrity and ethics, agreeing only to part of the content in Super Micro's 8-K filing. Media reports indicated that Ernst & Young had actually resigned from the company's audit work on October 24.

Super Micro stated that it disagrees with the accounting firm's decision and does not believe that "resolving any issues raised by Ernst & Young" will lead to a restatement of financial reports for the fiscal year 2024 or prior quarters, and has begun searching for a new auditing firm.

To make matters worse, due to being targeted by short-selling firm Hindenburg in August, Super Micro has still not been able to submit its 10-K annual report for the period ending June 30 on time (the deadline was August 29). According to Nasdaq regulations, Super Micro must resubmit the annual report or restore compliance plans by November 16 to regain compliance with the Nasdaq exchange. Mizuho analysts stated:

"We believe that the company faces a higher risk of delisting without an auditor, and there are also potential challenges in hiring a new auditor."

Wedbush, known for its "promotion" of the U.S. tech sector, also indicated that the latest developments pose a significant obstacle for the company to submit its financial reports on time to avoid delisting.

Super Micro Computer announced on Wednesday that it will release its earnings report for the first fiscal quarter of 2025 (the third quarter of the calendar year 2024) after the market closes on November 5