①Well-known short-selling institution Xingdengbao report said that Super Micro Computer has serious commercial violations, and they will short sell the company's stock; ②Since this year, Super Micro Computer's stock price has risen more than 90%, and it is considered one of the hottest technology companies because of artificial intelligence.
According to Caixin on August 28th (Editor: Malan), the short-selling institution Xingdengbao has found a new 'target'. On Tuesday, the research institution stated that they will short sell server equipment manufacturer Super Micro Computer, which is popular in the investment community due to the prosperous development of artificial intelligence.
Xingdengbao pointed out in a report that the investigation found obvious accounting manipulation, undisclosed related party transactions, evading sanctions and controls, and other issues in Super Micro Computer.
In 2020, Super Micro Computer had previously admitted to the U.S. Securities and Exchange Commission for improper accounting and disclosure issues during the 2014-2017 fiscal years, and promised not to violate regulations in the future. This has led some observers to believe that Xingdengbao's criticism of Super Micro Computer is not unfounded.
On Tuesday, Super Micro Computer's stock price fell by 8.7% at one point, but narrowed down to 2.6% at closing. A spokesperson for Super Micro Computer stated that they will not comment on false rumors and speculations.
Although Super Micro Computer remains firm in its position, industry insiders believe that Xingdengbao's report will lead to stricter scrutiny by regulatory authorities and increased attention to Super Micro Computer's customers, as it is currently a sensitive moment for the U.S. to upgrade its overseas sales restrictions on artificial intelligence.
Problems everywhere.
Super Micro Computer's main business is high-performance servers for data centers, and this business has flourished with the growing demand for artificial intelligence, boosting Super Micro Computer's revenue.
As of June of this fiscal year, Super Micro Computer's revenue has more than doubled to $14.9 billion. The company also expects its revenue to double again to $28 billion in this fiscal year. This good news has also boosted Super Micro Computer's stock price.
Since the beginning of this year, the company's stock price has risen over 90% in total. Since 2019, Super Micro Computer's stock price has averaged an annual increase of at least 30%, and last year it increased by 250%. The soaring market cap and optimistic prospects also led to Super Micro Computer being included in the S&P 500 Index in March.
However, in Xingdengbao's view, the current excitement surrounding Super Micro Computer is a temporary phenomenon that is difficult to sustain. According to Xingdengbao, in 2020, almost all of the executives who left Super Micro Computer due to scandals returned to the company, which is the root cause of Super Micro Computer's failure to improve its business practices.
According to former employees and clients of Super Micro Computer, even after reaching a settlement with the U.S. Securities and Exchange Commission, performance pressure still forced sales personnel to engage in practices such as substituting inferior products or intentionally delivering defective products. Xingdengbao described the company as a repeat offender.
The issues pointed out in this report could have a significant impact on Super Micro Computer's market position and could lead to its competitors, such as HP Inc. and Dell, gaining an advantage. At the same time, Super Micro Computer's troubles could also affect its clients and suppliers, such as Tesla, which exclusively purchases servers from Super Micro.
Investors are currently still waiting to see the impact of Xingdengbao's report, but his impressive track record, such as defeating Indian tycoon Adani and impacting the entire Indian stock market, may indicate that Super Micro Computer will have a difficult time escaping unscathed this time.