Shares of Super Micro Computer (NASDAQ: SMCI) were soaring today after the scandal-ridden artificial intelligence (AI) server maker finally had some good news to share with investors.
The company, which has unraveled over accounting issues, hired a new auditor, BDO, and submitted a plan to stay in compliance with the Nasdaq just ahead of the deadline.
As of 10:12 a.m. ET, Supermicro stock was up 28% on the news.
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Supermicro gets some redemption
Super Micro Computer has been embroiled in an accounting scandal for more than two months. It began with a short-seller attack, and led to delays in the filing of its 10-K and now 10-Q, an investigation by the Department of Justice, and the resignation of its previous auditor, Ernst & Young. The Nasdaq also warned it that it was out of compliance and would be delisted if it did not file its 10-K or submit a plan for regaining compliance.
After hours yesterday, the company said it had retained BDO USA as its independent auditor, and it submitted a compliance plan with the Nasdaq. Management said it believes it will be able to complete its 10-K and 10-Q within the discretionary period the Nasdaq allows.
What it means for Super Micro Computer
Supermicro has clearly dodged a bullet with today's news as being delisted from the Nasdaq would have crushed the stock and possibly the company as well.
However, finding a new auditor and buying time to get back into compliance doesn't rectify the underlying problems. The company still needs to straighten out the accounting issues that led to the delay in its filings, not to mention the outstanding DOJ investigation.
While Supermicro is in a better position than it was yesterday, investors should treat the stock cautiously as there could still be more bad news ahead.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
