(Bloomberg) -- Super Micro Computer Inc. investors have spent two months waiting for the company to file a plan that would allow it to remain listed on the Nasdaq exchange. With the deadline now just days away, that plan is yet to materialize.
The server maker has until Monday, Nov. 18, to either file a delayed 10-K annual report or submit a plan to file the form to Nasdaq to be in compliance with the exchange’s rules. Super Micro’s original deadline for filing the plan was Saturday, Nov. 16 but in accordance with the Nasdaq’s rules: If the last day of the period is a Saturday, Sunday, federal or Nasdaq holiday, the period then runs until the end of the next day that is not one of those days.
“As we previously disclosed, Super Micro intends to take all necessary steps to achieve compliance with the Nasdaq continued listing requirements as soon as possible,” a Super Micro spokesman said. Shares of Super Micro fell as much as 4.2% in intraday trading on Friday.
Super Micro delayed its annual filing in August following a damaging report from short seller Hindenburg Research. The company is also facing a US Department of Justice probe, and its auditor, Ernst & Young LLP, resigned in October, citing concerns about Super Micro’s governance and transparency.
This week, Super Micro postponed filing its quarterly 10-Q form for the period ending Sept. 30. The company also said that the committee its board formed to review internal controls had finished its investigation stemming from concerns raised by Ernst & Young, and that while it “has other work that is ongoing” it expects the review to be completed soon.
“Whatever the results are would probably play into whatever their plan is” to hire a new auditor and file their financial reports, Matt Bryson, an analyst at Wedbush, said by phone. “I wouldn’t be shocked if something comes out over the next couple of days.”
Super Micro shares have tumbled nearly 70% since announcing it would be delaying its annual filing in August. The losses are even steeper when measured from the stock’s record high in March. More than $55 billion in value has been erased over that span as Super Micro shares plunged 85%.
If the company submits a plan that Nasdaq approves, its deadline to file will likely get extended into February. If a plan is not approved, the company can appeal the decision. Nasdaq declined to comment.
The consequences of missing the deadline with Nasdaq could be dire. If the company is delisted, it would likely mean removal from the S&P 500 Index, which Super Micro joined this year. It also potentially faces an early repayment on $1.725 billion of its bonds if it’s kicked off the Nasdaq stock exchange.
That said, it attracted the attention of a swath of Wall Street’s event-driven community, who spotted a chance for big gains by buying their convertible bonds now. Their bet is that the bonds will be bought back at par upon delisting, due to an embedded clause in the instrument. Those notes, due March 2029, climbed from mid-70-cent range to the mid-80-cents over the past few weeks.
It’s not the first time that Super Micro has been delisted. In 2019, shares were taken off the Nasdaq exchange after the company failed to meet deadlines to file a 10-K and several quarterly reports.
“I’ve never seen a company go through this problem twice,” said Bryson. “I don’t know how that influences things.”
Super Micro got approval to rejoin the Nasdaq exchange in 2020. That same year, the company resolved an investigation by the US Securities and Exchange Commission into its accounting by paying a $17.5 million penalty. Super Micro didn’t admit to or deny the regulator’s allegations as part of its settlement.
This year’s woes have marked a reversal for the company’s shares, which surged in the first few months of 2024 amid the artificial intelligence frenzy and being added to the S&P 500 Index.
In an early November business update, the company gave a weaker than anticipated outlook, saying it expected revenue to be $5.5 billion to $6.1 billion, well below the nearly $6.8 billion that Wall Street projected.
--With assistance from Yiqin Shen and Brandon Harden.
(Updates stock move. Adds detail in paragraph nine.)
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