Super Micro Computer Stock Spikes 25% After Hours, and Shorts Feel the Squeeze

Super Micro Computer, Inc. (SMCI) soared 15.9% in the regular session today, as traders rushed to buy the beaten-down stock after a late-Friday Barron’s report suggested that management would submit a compliance plan in time to avoid a potentially devastating delisting. It looks like those sources were rock-solid, with SMCI up more than 25% after hours tonight after management said it has appointed BDO USA as its new auditor and submitted a compliance plan to Nasdaq. 

SMCI has been in the hot seat following the resignation of its previous Big 4 auditor, Ernst & Young, as it looks to submit delayed financial filings. Following a year-to-date decline of 24% in the stock’s value, some bulls now view SMCI as undervalued, and the shares trade at a remarkably cheap 6.40 times forward adjusted earnings. 

If short-sellers start to cover their positions, it could push the stock even higher. With nearly 19% of its float sold short at the end of October, SMCI was the most heavily shorted S&P 500 Index ($SPX) stock by this measure for the third month in a row.

While the market’s initial reaction is overwhelmingly bullish, Super Micro Computer still faces significant hurdles, including the need to file overdue financial reports and resolve internal governance issues. The risk is relatively high for further stock volatility and operational disruptions, and long-term investors should note that management still needs to successfully implement its newly submitted compliance plan.

Against this backdrop, most analysts have backed down from their previously bullish opinions on SMCI stock, with the consensus rating now at a “Hold.”