On August 27, Hindenburg Research issued a report accusing Supermicro (NASDAQ: SMCI) of accounting manipulation. The next day, Supermicro announced that it would not be able to submit its 10-K annual report on time.

The company said in the filing that it cannot file its annual report within the required time without unreasonable effort or expense. At the same time, the company's management needs more time to evaluate the design and operating effectiveness of internal controls over financial reporting as of June 30, 2024. It added that the fiscal year and quarterly results have not changed.

Stock Price Slumped, Market Value Evaporated

Due to the postponement of report submission, Supermicro's stock price fell 19.02% during normal trading hours, and further fell 7.01% after hours, with the total market value evaporating by 25%.

This news had a major impact on Supermicro and its CEO Liang Jianhou, whose net assets evaporated by more than US$800 million due to the drop in stock prices.

According to the Bloomberg Billionaires Index, Liang Jianhou's net worth exceeded US$9 billion in March, but fell to US$3.5 billion on that day.

Investment Companies Views Differ

Thomas Hayes, chairman and managing member of Great Hill Capital, said the delay in submitting the report was a warning sign, especially in the context of the allegations, but that it would take time for the truth to emerge.

In the report, Wells Fargo analysts lowered Supermicro's target price to $375 from $650, reflecting an estimate adjustment to 2025 earnings per share, mainly taking into account uncertainty and concerns about revenue recognition.

Alpha Picks told investors that although the delay in the 10-K report caused concerns, the content of Hindenburg's short-selling report is similar to that of Spruce Point Management in 2023, which may panic investors. Supermicro's fundamentals remain strong and its growth potential is huge.

J.P. Morgan defended Supermicro after Hindenburg's short-selling announcement, pointing out that the report provided limited evidence of accounting treatments and found no new material information between related companies owned by Liang's brothers.