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Super Micro Computer Inc. (Nasdaq: ), a key player in the artificial intelligence server industry, is by the U.S. Department of Justice (DOJ), according to sources familiar with the matter. The probe, which is said to be in its early stages, has sent shockwaves through the market, causing significant fluctuations in the company’s stock price and raising questions about its financial practices.
DOJ Investigation and Whistleblower Lawsuit
The DOJ investigation follows a damning report by activist short-selling firm Hindenburg Research, which raised concerns about SMCI’s accounting practices.
According to a , a prosecutor from the U.S. attorney’s office in San Francisco is reportedly seeking information related to the case. The inquiry appears to be connected to a whistleblower lawsuit filed in April by Bob Luong, a former SMCI employee. Luong’s lawsuit alleges that SMCI improperly recognized revenue from 2020 to 2022, including booking sales that had not been completed and shipping incomplete equipment to customers.Hindenburg’s August report also highlighted transactions between SMCI and companies owned by CEO Charles Liang’s family, as well as allegations of shipments to Russian companies in violation of U.S. sanctions.
In response, SMCI delayed filing its annual report and formed a board committee to review internal controls. CEO Charles Liang defended the compasny in a letter to customers on September 3, calling the allegations in the short-seller report “false or inaccurate.” SMCI has requested that Luong’s lawsuit be moved to arbitration, with a court hearing scheduled soon.
SMCI Stock Plunges on DoJ Probe News
The news of the DOJ probe has had a significant impact on SMCI’s stock price. As of 12:31 PM EDT on the day of the report, SMCI’s stock was trading at $387.85, down $70.30 or 15.34%. This sharp decline follows a period of remarkable growth for the company, which saw its market capitalization peak at $66 billion earlier this year.Despite the recent setback, SMCI’s long-term performance remains impressive. The company has significantly outperformed the S&P 500 index across various timeframes. Year-to-date, SMCI has returned 36.44% compared to 20.20%. Over a five-year period, SMCI’s return stands at a staggering 1,911.67%, dwarfing the S&P 500’s 92.08% return over the same period.Key financial metrics for SMCI include a trailing of 22.80, forward P/E of 13.95, and earnings per share (TTM) of $20.11. The company’s market capitalization currently stands at $22.711 billion. Analyst recommendations for SMCI stock are mixed, with price targets ranging from $325.00 to $1,300.00.More By This Author:Southwest Airlines Stock Takes Off On $2.5 B Buyback Plan, Defying Activist Pressure3 Stocks That Can Gain From China’s Stimulus Plans Micron Technology Set To Report Q4 Results Amid AI Boom
