Shares of Super Micro Computer fell 33% on Wednesday following the announcement that Ernst & Young (EY) had resigned as its public accounting firm. EY’s resignation occurred while auditing Super Micro’s most recent fiscal year’s financials. In July, EY communicated concerns over transparency and internal control issues related to the tech company’s financial reporting, leading to a review by Super Micro’s board.
During the review, EY raised questions about Super Micro’s commitment to integrity and ethical values, as well as its transparency and oversight independent of the CEO and other management. The Associated Press contacted EY for a statement. Super Micro’s regulatory filing detailed EY’s resignation letter, stating it could no longer rely on representations from the company’s management and audit committee, concluding it could no longer provide audit services in accordance with the law or professional obligations.
EY’s resignation letter was sent last week, and the company’s review is ongoing. Super Micro expressed disagreement with EY’s resignation decision and is working to select new auditors. The company does not expect the resolution of EY’s concerns to lead to restatements of previously reported quarterly financial results and will provide a business update next week.
This comes two months after Hindenburg Research accused Super Micro of accounting manipulation and undisclosed transactions, also alleging the rehiring of executives involved in a 2018 scandal. The Justice Department is reportedly investigating Super Micro, and the SEC previously charged the company with improper accounting practices from fiscal 2015 to 2017, resulting in a $17.5 million civil penalty.
Despite recent challenges, Super Micro has been benefiting from the artificial intelligence wave, with shares up 17% year to date. In August, the company reported a 143% increase in fourth-quarter revenue to $5.31 billion compared to $2.18 billion in the same quarter of 2023. Super Micro Computer Inc., headquartered in San Jose, California, ended Wednesday with a share price drop of $16.
The stock market has experienced a significant update. As of 05, the shares are trading at $33.07 per unit.
