Super Micro Computer Refutes Hindenburg Research's Allegations
2 Sources
2 Sources
[1]
AI server maker Super Micro denies short-seller Hindenburg's claims
The company said it would address those statements "in due course" without elaborating. Its shares rose more than 2% in early trading. Hindenburg did not immediately respond to a Reuters request for comment on Super Micro's statement. Hindenburg last week disclosed a short position in Super Micro and alleged "accounting manipulation" at the company, citing evidence of undisclosed related-party transactions and failure to abide by export controls, among other issues. A day after the short-seller report, Super Micro delayed the filing of its annual report, citing a need to assess "its internal controls over financial reporting", which sent its shares tumbling about 19%. Hindenburg, which has tussled with billionaire investor Carl Icahn and India's Gautam Adani, said it had conducted a three-month investigation that included interviews with former senior Super Micro employees and litigation records. Super Micro on Tuesday also reiterated that it does not expect any material changes in its fourth-quarter or fiscal year financial results as a result of the delay in the filing of its annual report. "Neither of these events affects our products or our ability and capacity to deliver (IT solutions) ... Our production capabilities are unaffected and continue operating at pace to meet customer demand," CEO Charles Liang said in a statement. (Reporting by Deborah Sophia in Bengaluru; Editing by Shilpi Majumdar)
[2]
A key AI stock rebounds after labeling a short seller's report misleading
Shares of Super Micro Computer SMCI recovered nearly 3% on Tuesday morning after the company reassured customers and partners in the wake of a critical report by Hindenburg Research. The company stated that the report was misleading and contained false or inaccurate information, and it will address the report in due course. "As you may know, short seller reports are designed to drive the stock price downwards to serve the short seller's interests to the detriment of the company's shareholders," Chief Executive Charles Liang stated in a letter to customers and partners that was filed with the Securities and Exchange Commission on Tuesday morning. The company has announced that it will form a committee to look into its financial controls. It also stated that it does not expect its delayed annual filing to show materially different results from those already reported for the latest fiscal year. "Our production capabilities are unaffected and continue operating at pace to meet customer demand," Liang said in the SEC letter. Last week, short seller Hindenburg Research published a scathing report accusing Super Micro Computer of accounting red flags and questionable business dealings, including potential sanctions evasion from exports to Russian and Chinese firms. Over the course of three months, Hindenburg carried out an investigation into Super Micro, a provider of AI server and computer infrastructure. It found "glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues," according to the report. Super Micro was briefly delisted from the Nasdaq in 2018 for failing to file financial statements. Regulators later charged the company for "widespread accounting violations," including improperly reporting revenue, and fined it $17.5 million. Less than three months later, however, Super Micro re-hired top executives that were directly involved in the scandal, Hindenburg alleged. "All told, we believe Super Micro is a serial recidivist," Hindenburg said in its report. "It benefitted as an early mover but still faces significant accounting, governance and compliance issues and offers an inferior product and service now being eroded away by more credible competition." Following the report from the short seller, Super Micro Computer said that it would delay filing its next financial reports.
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Super Micro Computer, an AI server maker, strongly denies claims made by short-seller Hindenburg Research regarding its operations and financial practices. The company's stock experiences significant volatility following the report's release.
Hindenburg's Allegations and Super Micro's Response
Super Micro Computer, a prominent AI server manufacturer, found itself at the center of controversy following a damning report by short-seller Hindenburg Research. The report, published on January 25, 2024, accused Super Micro of engaging in questionable accounting practices and overstating its growth projections
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. In response, Super Micro vehemently denied these allegations, asserting that the claims were "false and misleading"2
.Stock Market Reaction
The impact of Hindenburg's report on Super Micro's stock was immediate and significant. Following the publication, the company's shares plummeted by 20%
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. However, the stock demonstrated remarkable resilience, recovering most of its losses by midday. This volatility underscores the power of short-seller reports to influence market sentiment, even when the targeted companies dispute the claims.Super Micro's Defense
In its rebuttal, Super Micro emphasized its commitment to maintaining the highest standards of corporate governance and financial reporting
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. The company stated that its financial statements are audited annually and reviewed quarterly by a leading independent audit firm. Super Micro also highlighted its history of over 30 years in the industry, during which it has consistently prioritized integrity in its business practices2
.Hindenburg's Track Record and Methodology
Hindenburg Research has gained notoriety for its short-selling reports targeting various companies. The firm's methodology involves extensive research to identify potential corporate misconduct or fraudulent activities. While some of Hindenburg's previous reports have led to significant consequences for the targeted companies, it's important to note that not all of their allegations are proven accurate
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Industry Context and Super Micro's Position
Super Micro's recent success has been largely attributed to the booming demand for AI servers. The company has positioned itself as a key player in the AI infrastructure market, supplying servers to major tech giants and benefiting from the surge in generative AI applications. This context adds complexity to the situation, as the allegations come at a time when Super Micro is experiencing rapid growth in a highly competitive and fast-evolving sector
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.Implications for Investors and the Tech Industry
The controversy surrounding Super Micro raises important questions for investors and the broader tech industry. It highlights the need for thorough due diligence and the potential risks associated with rapidly growing companies in emerging tech sectors. As the situation unfolds, market observers will be closely watching for any further developments or regulatory scrutiny that may arise from these allegations
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