Super Micro shares fall after short seller Hindenburg Research calls the company a ‘serial repeat offender’ in new report

Shares of Super Micro Computer (SMCI) fell more than 2% on Tuesday following a report from short seller Hindenburg Research. Claiming and other things“Accounting Manipulation” at the AI ​​High Level

Hindenburg Research said its three-month investigation uncovered “glaring accounting red flags, evidence of undisclosed related-party transactions, sanctions and export control failures, and customer issues.” The firm disclosed Tuesday that it had a short position in Super Micro.

Yahoo Finance reached out to Super Micro but did not hear back from the company by the time of publication.

The maker of data center servers and management software has been a focus of investors this year as the AI ​​boom has taken hold. The company buys components from AI chipmaker Nvidia (NVDA).

Super Micro’s stock price soared from $290 in early January to over $1,200 in March. The stock is down about 50% from its March high, but is still up 90% so far this year. The company recently announced a 10-for-1 stock split, effective October 1.

Hindenburg claimed in the report that despite a $17.5 million settlement with the SEC in August 2020 following an investigation into “widespread accounting violations,” Super Micro’s business practices had not improved and that senior executives who left amid the scandal were later rehired.

The report quoted a former salesman as saying: “Almost all of them have come back. Almost all of the people who were responsible for this misconduct have been fired.”

“Even after the SEC settlement, pressure to meet quotas led salespeople to use ‘partial deliveries’ or ship defective products at the end of each quarter to fill channels with distributors,” the report said, according to interviews with former employees and customers.

“Overall, we believe Super Micro is a serial criminal,” Hindenburg said in the report.

“While they have benefited as first movers, they still face significant accounting, governance and compliance challenges and offer inferior products and services that are being eroded by more credible competition.”

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