Finance Association, November 5 (Editor: Zhao Hao) Last week, the former “AI monster” ultra-microcomputer fell by more than 8% during the year. Since the high recorded in March this year, the stock has plummeted by more than three-quarters, and the company will announce quarterly results after the market this year.

Investors are beginning to wonder whether the company, which is mired in financial fraud, will be delisted by NASDAQ and removed from the S&P 500 index. Last week, a document revealed that Ernst & Young, one of the big four accounting firms, resigned as an audit of ultra-microcomputers, saying it was “unwilling to have anything to do with management's financial statements.”

EY raised concerns about the internal management, independence of the board of directors, and accounting practices of ultra-microcomputers. This is a major new blow to ultra-microcomputers. Currently, the company is also facing investigations by the US Department of Justice and financial charges against the well-known shorting agency Hindenburg.

In fact, when Ultramicrocomputer delayed the submission of Form 10-K in August of this year, the company's status as a listed company had already begun to loosen. Nasdaq's rules allow companies to submit a plan to return to compliance by mid-November, and if the plan is approved, the period can be extended until February 2025.

But EY's resignation made this goal even more challenging. Wedbush analyst Matt Bryson told the media, “I think they may eventually be delisted because they have exceeded the deadline. How can they produce a 10-K report in just a few months without an auditor?”

At the beginning of the year, under the impetus of artificial intelligence by Wall Street, ultra-microcomputers were “deeply tied” to Nvidia. The stock price continued to soar, and was included in the S&P 500 index in March. But as the company uncovered a mountain of problems, Nvidia is also allegedly preparing to redistribute its orders to other suppliers.

At the time of Ernst & Young's resignation, Ultrafine said “this matter is not expected to be a restatement of previously issued financial reports” and has begun searching for another auditor. However, these statements did not convince Wall Street analysts, who were more cautious about them.

Analyst Needham wrote last week: “We now believe that once a new accounting firm is hired, the previous financial statements may have to be reprepared, which is a significant risk.”

According to another analysis, if the ultra-microcomputer is delisted from the NASDAQ, it may trigger its exclusion from the S&P 500 index — causing the stock to be forcibly sold by institutions. According to the data, about 24% of Ultramicomputer's shares are held by passive funds, and about 8% are held by funds related to the S&P 500 index.

It is worth mentioning that ultra-microcomputers were removed from the NASDAQ exchange in 2018 and were once withdrawn to the OTC market for trading. Wedbush analyst Bryson pointed out that when it was last delisted, the company's growth had stagnated for two years.

Bryson added that customers may be frightened by financial issues as this could suggest that the company's ability to deliver products in a timely manner is being disrupted. There was news during the day that ultra-microcomputer rivals Gigabyte, ASRock and others unexpectedly received a number of inquiries from customers and raised their revenue and shipments one after another.

GIGABYTE stated in the financial report that the company is speeding up the deployment of liquid cooling technology to match Nvidia's rapid growth. Meanwhile, ASRock was reported to have received orders from ultra-micro, medium and small customers, setting a third-quarter revenue record.