Super Micro Stock Sell-Off Deepens As Fears Over Nasdaq 100 Exclusion Mounts: Retail’s Uncertainty Rises

Shares of Super Micro Computer, Inc. ($SMCI) fell sharply on Wednesday, defying the broader market strength and the buoyancy seen in the tech space.

Super Micro was down for a second straight session after starting the week on a modestly positive note. The artificial intelligence server maker’s announcement that the Nasdaq had granted it an extension until Feb. 25, 2025, to file its delayed annual and quarterly reports supported the stock on Monday.

It reversed course on Tuesday, settling the session down 8.2% at $40.54. The decline came despite Super Micro’s CEO Charles Liang assuaging investor concerns over the company's ability to meet the Nasdaq deadline. Liang spoke on the sidelines of the Reuters NEXT conference in New York on Tuesday.

The price decline suggests traders didn’t buy into Liang’s assertion and remain skeptical that the company would become up-to-date with filing the financial reports. 

Super Micro’s troubles started when its then-auditor Ernst & Young flagged issues with its accounting and internal controls. However, a board-appointed independent committee did not find any wrongdoing on the company's part. The company also succeeded in appointing BDO as its new auditor. 

Delisting fears lingered due to the non-filing of the fiscal year 2024 report on Form 10-K and the September quarter report on Form 10-Q on time. With the extension granted by the Nasdaq, the market granted the stock some reprieve.

However, a recent report by Barron’s reignited the concerns. The publication raised the possibility of Super Micro being booted out of the Nasdaq 100 Index, which comprises 100 of the biggest non-financial tech stocks listed on the namesake exchange. Its annual reconstitution decision is typically announced after the close of trading on the second Friday in December, which falls on Dec. 13 this year.

SMCI sentiment and message volume December 11, 2024, as of 3:09 pm ET | Source: Stocktwits

Retail sentiment remains mixed given the uncertainty. On Stocktwits, sentiment toward the stock is ‘neutral’ (53/100), a deterioration from the ‘bullish’ mood that prevailed a day ago. Message volume jumped to ‘high’ as traders discussed the latest developments.

One user on the platform suggested they used the weakness to accumulate more shares.

Another suggested the fair value of the stock is $54.

At last check, Super Micro shares were down 4.56% at $38.69, as they traded in the $36.07-$38.76 range, on below-average average volume. 

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