Super Micro Computer shares plunge again. Is the worst already over?

It's gotten worse and worse Super microcomputer (SMCI -22.65%) in the past two months, when a short-seller attack led to a delay in the 10-K filing, a Justice Department investigation and, just last week, the resignation of Ernst & Young as auditor.

Last night, the company added weak preliminary first-quarter results to the list of reasons for the stock's plunge. Management also raised concerns about its financial reporting by saying it still doesn't know when it will be able to file its 10-K report.

As a result, the stock fell 24.4% on the news as of 10:56 a.m. ET.

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Can you trust Super Micro Computer?

The company reported unaudited preliminary results, which in itself seemed strange since it currently does not have an auditor and investors are still waiting for the official 2024 financial report.

The company said it had preliminary revenue of $5.9 billion to $6 billion in the quarter, below estimates of $6 billion to $7 billion. The bottom line of adjusted earnings per share of $0.75 to $0.76 was in line with its guidance.

Guidance was also weak, calling for second-quarter revenue of $5.5 billion to $6.1 billion. Management has provided an update to its financial reporting. Its independent select committee said it found no fraud or misconduct by senior management or the board. The committee said it would recommend a range of remedies to internal governance and expects to publish a full report within the next week.

Management generally avoided discussing the financial reporting challenges it faces.

Can the stock recover?

At this point, Supermicro's quarterly numbers are not the problem. Management must provide clarity to investorsHire a new auditor and Complete the 10-K filing. The company is also threatened with a delisting notice from the Nasdaq due to the delay in 10-K filing.

Supermicro's shares could easily fall further from here if the company can't provide an answer to its accounting scandal. At the moment it seems more likely that things will get worse before they get better.