Super Micro Computer, Inc. (SMCI) is set to be removed from the Nasdaq-100 Index, a change scheduled to take effect before the market opens on December 23, 2024.
The announcement has already immediately impacted the company’s stock, with shares dropping 15% in pre-market trading at the time of writing. This development comes amidst the company’s challenges, including financial reporting issues and an ongoing investigation by the U.S. Department of Justice.
SMCI Set to Be Removed from the Nasdaq-100 Index
Super Micro is facing multiple hurdles that have led to its removal from the Nasdaq-100. A primary issue is the company’s delay in submitting its annual financial report, which has put it at risk of delisting. Compounding these difficulties is a sharp decline in share value, down 69% from its peak in March.
The company has been under scrutiny due to issues with its former auditor, Ernst & Young LLP, and an investigation by the U.S. Department of Justice. To address these challenges, Super Micro has engaged Evercore Inc. to assist in capital raising efforts, exploring equity and debt financing options to stabilize its finances.
The removal from the Nasdaq-100 Index could potentially affect investor confidence in SMCI. This shift may prompt investors to reassess their positions, considering the risks associated with the company’s ongoing challenges. The changes in the index composition can also influence investment products and strategies linked to the Nasdaq-100, potentially affecting the broader market sentiment towards the company.
SMCI Stock Plunges on the News
Following the announcement of its removal from the Nasdaq-100, SMCI’s stock has experienced notable price fluctuations, falling over 15% in premarket trading at the time of writing.
Over the past year, the stock has seen a wide range, with a 52-week low of $17.25 and a high of $122.90. Key financial metrics indicate a beta of 1.279, suggesting higher volatility than the market and a trailing P/E ratio of 18.13. The company’s market cap is approximately $21.34 billion, with a debt-to-equity ratio of 39.75, highlighting its financial leverage.
Analysts have issued a “Hold” recommendation for SMCI, with a recommendation mean of 3.0. The target price range varies significantly, with a high of $93.00 and a low of $23.00, reflecting uncertainty about the company’s future performance.
The mean target price is $40.32, and the median is $32.75. Recent closing prices show a downward trend, with shares closing at $36.45 on December 13, 2024, down from $44.16 on December 9, 2024. As the company navigates its current challenges, investors will be keenly observing its strategic moves and market performance in the coming months.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
About the author
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird’s US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
