Super Micro Shares Drop 9% Following Critical Report from Hindenburg Research Highlighting Accounting Concerns

Super Micro Computer (NASDAQ:SMCI) saw its shares drop nearly 9% earlier today, following the release of a critical report by short seller Hindenburg Research. But, the shares quickly recovered and closed the day with just around a 2% loss.

The report raised concerns over the company's accounting practices and corporate governance, potentially alarming investors and shareholders.

Super Micro, a $35 billion server manufacturer, has faced scrutiny since a 2018 delisting from Nasdaq for failing to file financial statements. Despite settling with the SEC for $17.5 million in August 2020 over accounting violations, Hindenburg claims that the company resumed questionable practices soon after.

The short seller’s report alleges improper revenue recognition and criticizes the rehiring of executives previously involved in accounting scandals. Litigation records and interviews with former employees suggest that key figures implicated in past wrongdoing were brought back less than three months after the SEC settlement.

Additionally, Hindenburg raised concerns over Super Micro’s dealings with related parties. CEO Charles Liang’s brothers reportedly control suppliers Ablecom and Compuware, which were paid $983 million over three years. These transactions, described as circular, are reportedly not fully disclosed, raising questions about revenue recognition and profit margins.

The report casts a shadow over Super Micro’s governance and transparency, potentially posing risks to its future financial stability.