Super Micro Computer (SMCI -5.40%) stock posted big gains this week despite a substantial pullback for the broader market. The company closed out Friday’s trading with its share price up 17% from the previous week’s market close, according to data from S&P Global Market Intelligence. Meanwhile, the S&P 500 index closed out the stretch down 1.7%, and the Nasdaq Composite fell 2.3%.
While the broader market saw sell-offs in response to some bearish macroeconomic data, Supermicro ended the week with big valuation gains thanks to investor excitement surrounding its upcoming 10-K filing. The stock’s outlook has been mired by uncertainty due to accounting controversies and the delayed filing of the company’s annual report. However, investors will finally have a lot more clarity next week.
Supermicro stock surges in anticipation of the company’s 10-K report
Supermicro has said it will submit its 10-K filing for its 2024 fiscal year, which ended in June, by Feb. 25. For better or worse, the filing is poised to be a major catalyst for the stock.
Following a short-seller report from Hindenburg Research in July that alleged repeated instances of bad accounting, Supermicro announced it was delaying its 10-K filing to conduct internal reviews. Shareholders got another shock in October when Ernst & Young announced it had resigned as the company’s public results auditor. Ernst & Young cited an inability to rely on management’s statements and the independence of the company’s auditor committee as reasons for the resignation.
The uncertainty has caused Supermicro to trade at levels that look cheap by many traditional valuation metrics, but BDO is now on board as the server specialist’s new auditor — and the long-awaited 10-K report should arrive by this Tuesday. Investors have been piling into Supermicro stock with the expectation that the stock will soar if the company’s annual report arrives without significant downward restatements for previously reported results.
What’s next for Supermicro?
This coming week will play a huge role in shaping the sentiment surrounding Supermicro. While the tech specialist should continue to see some strong demand tailwinds connected to investment in artificial intelligence (AI) data centers, the upcoming report will determine whether the company starts getting more valuation credit for its sales and earnings performance or investors continue to regard the stock with caution.
Despite lowering its sales guidance for this year to between $23.5 billion and $25 billion, Supermicro says it expects sales of $40 billion in its next fiscal year. If the company’s 10-K report arrives without any big issues and clears up lingering accounting concerns, investors will quickly become much more excited about next year’s sales target.
Keith Noonan 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.