These have been terrible weeks for Super Micro Computer (SMCI) action.
Shares of the data center server maker, seen as one of the biggest beneficiaries of the AI craze this year, have fallen more than 30% since delay in its annual report in late August, shortly after short seller Hindenburg Research accused AI, champion of accounting manipulation.
The stock fell more than 6% on Friday amid a broader selloff in technology stocks. JPMorgan analysts downgraded Super Micro from Overweight to Neutral and cut its price target by nearly half to $500.
“Given our expectations of a near-term impact on the stock due to uncertainty, we prefer to recommend that new investors stay away until the company is back in compliance,” wrote JPMorgan’s Samik Chatterjee and his team.
Analysts said the downgrade was not due to reduced confidence in the company’s ability to return to compliance with regulators by publishing its annual financial report, nor to the contents of the Hindenburg report.
In addition to the filing, JPMorgan analysts expect “a response from Super Micro to ensure customers do not divert their orders, which could involve aggressive pricing, in our view, and a competitive response from its peers.”
Analysts at Barclays and CFRA have also downgraded the stock in recent days after the San Jose, Calif.-based company, said It needed more time to file its annual report for its financial year ending June 30.
“Additional time is required for SMCI management to complete its assessment of the design and operating effectiveness of its internal controls over financial reporting as of June 30, 2024,” the company said. said in a statement August 28.
The announcement came a day after Hindenburg Research claimed, among other things“accounting manipulation” at the highest level of artificial intelligence.
The short seller claimed that despite a $17.5 million settlement in August 2020 with the SEC following an investigation into “widespread accounting violations,” Super Micro’s business practices failed to improve and senior executives who left amid the scandal were subsequently rehired.
“Overall, we believe that Super Micro is a serial offender,” the report reads.
Shares of Super Micro rose from below $300 in early January to a peak of nearly $1,200 in March, when the stock was added to the S&P 500 (^GSPC).
The ticker too joined the Nasdaq 100 index (^NDX) in July.
Shares were trading just below the $400 level on Friday. Despite the sharp decline, Super Micro is still up about 35% year-to-date.
The company recently announced a 10-for-1 stock split, effective October 1.
Ines Ferre is a senior economics journalist for Yahoo Finance. Follow her on X at @ines_ferre.
Click here for the latest stock market news and in-depth analysis, including stock-moving events
Read the latest financial and business news from Yahoo Finance