Super Micro's 45% plunge this week wipes out the stock's full-year gain

Great microphone Investors continued to push for the exit on Friday, pushing the stock down another 11% and extending this week's selloff to 45% after the data center company lost its second auditor in less than two years.

The company's shares closed at $26.05, erasing all 2024 gains. The stock had peaked at $118.81 in March and was up more than four-fold for the year at that point. Earlier this month, S&P Dow Jones added the stock to the S&P 500, and Wall Street benefited from the company's growth, fueled by sales of packed servers Nvidia's Artificial intelligence processors.

Super Micro's spectacular collapse since March has wiped out about $55 billion in market capitalization and put the company at risk of delisting from the Nasdaq. On Wednesday, as the stock suffered its second-worst day ever, Super Micro said it would release a “business update” for its latest quarter on Tuesday, election day in the US

The company's most recent challenges date back to August, when Super Micro said it would not file its annual report with the SEC on time. Prominent short seller Hindenburg Research then announced a short position in the company and wrote in a report that it had found “new evidence of accounting manipulation.” The Wall Street Journal later reported that the Justice Department was in the early stages of an investigation into the company.

Super Micro announced Wednesday that Ernst & Young had resigned as an accounting firm, just 17 months after acquiring Deloitte & Touche. The auditor said it was “unwilling to be associated with the financial statements prepared by management”.

A spokesperson for Super Micro told CNBC that the company “disagrees with E&Y's decision to resign and we are working diligently to select new auditors.” Super Micro does not believe the matters raised by Ernst & Young ” “will result in a restatement of its quarterly financial results for the fiscal year ended June 30, 2024 or for prior fiscal years,” the representative said.

Analysts at Argus Research downgraded the stock to a medium-term hold on Thursday, citing the Hindenburg note, reports of the Justice Department's investigation and the departure of accounting firm Super Micro, which analysts called a “serious matter.” Argus' concerns go beyond accounting irregularities. The company notes that the company may do business with problematic companies.

“The Department of Justice’s concerns, in our view, may relate primarily to related party transactions and SMCI products ending up in the hands of sanctioned Russian companies,” the analysts wrote.

In September, a month after the filing delay was announced, Super Micro said it had received a notice from Nasdaq indicating that the delayed status meant the company was out of compliance with the exchange's listing rules . Super Micro said Nasdaq's rules gave the company 60 days to file its report or submit a plan to restore compliance. Based on this time frame, the deadline would be mid-November.

Although Super Micro hasn't filed financials with the SEC since May, the company said in an earnings presentation in August that revenue more than doubled for the third consecutive quarter. Analysts expect revenue to rise more than 200% to $6.45 billion in the fiscal first quarter, which ended in September, according to LSEG. That's up from $2.1 billion a year ago and $1.9 billion in the same fiscal quarter of 2023.