Super Micro Computer's stock (SMCI, Financial) has taken a sharp hit, dropping over 32% today following a major shake-up: Ernst & Young (EY) abruptly resigned as the company's auditor. Just one month ago, a Wall Street Journal report revealed that the Department of Justice had launched a probe into Super Micro's accounting practices, following serious allegations from Hindenburg Research of potential manipulation and undisclosed related-party dealings. In its resignation letter, EY mentioned that the newly surfaced information that it claims undermines confidence in Super Micro's financials—marking a severe escalation in the company's mounting challenges.
Despite Super Micro's assurances that these governance issues won't affect prior financial statements, the dual blows from EY's departure and the DOJ investigation have sent shockwaves through the market. Hindenburg's earlier claims and today's resignation have intensified concerns about the company's internal controls and transparency, with shareholders now questioning the stability behind Super Micro's growth story. The formation of a special committee to review these issues hasn't calmed investors, as today's drop shows the real-time fallout of this unprecedented crisis.
The company, a former tech darling of the AI server industry, now faces a major test of investor confidence. With a peak valuation of $67 billion in March, Super Micro's market cap has since taken a hit, making the next steps crucial. Investors will be watching closely as the company scrambles for a new auditor and braces for the DOJ investigation. Super Micro's ability to handle these hurdles will determine if it can reclaim its momentum—or if it will be a cautionary tale in the high-stakes world of AI-driven growth.
