BREAKING: Hindenburg Research Issues Blistering Allegations on $SMCI, Shares Plummet....

I’m just going to come out and say it, but Hindenburg Research is giving me the Batman of Wall Street vibes. They are the vigilante’s that scour the streets in the night, picking apart flaws, and slimy financials like they are on a mission to punish companies in revenge of some executive bankrupting their parents from a deal gone wrong. 

(Source: Giphy) 

And clearly, they are pretty friggin good at it too as 10 of their reports on specific companies have either caused heavy losses, putting their targets on the verge of ruin, or full on bankruptcies. Which is why now, as of today, Big Tech investors are in full panic mode as their next victim has become one of the industries finest: Super Micro Computer. 

(Source: Yahoo Finance) 

“Those mother f****ers” - every $SMCI investor this morning. 

In short, while the stock has been soaring this year with an incredible +94.02% YTD gain, and a massive 2,827.35% return over the last five years, investors are punching air over Hindenburg’s boulder barrage of accusations. Think accounting hijinks, shady business dealings with the CEO’s family, and some good old-fashioned sanctions evasion. 

For instance, what set this whole drama off was back in 2020, when the SEC gave Super Micro a little slap on the wrist for what they called “widespread accounting violations.” Translation: they were playing fast and loose with around $200 million in revenue that shouldn’t have been on the books. 

(Source: Market Watch) 

Fast forward to 2024, and Hindenburg says they’re up to their old tricks again as former employees paint a picture of a company that’s more interested in making the numbers look good than making sure the products are, you know, actually complete. 

This includes recognized revenue on incomplete or defective product shipments like a client buying a state-of-the-art AI server only to find out it’s missing key components. See: Similar situation of ordering a Tesla only to find out you can get a face full of metal from your hood on the freeway. 

(Source: Giphy) 

In addition, Hindenburg also accused SuperMicro of engaging in undisclosed related party transactions that involve companies controlled by the CEO’s family (Succession, anyone?). According to the report, Super Micro has allegedly been funneling millions of dollars to these family-controlled entities without disclosing it to investors. Which, like Icahn's latest $5 billion non-disclosing mistake, is a big no-no when it comes to regulators. 

Now, keep in mind, obviously family businesses can be great, but when you’re running a publicly traded company, this kind of thing is about as shady as Jordan Belfort's pump ‘n dump rabbit hole that got him two years in prison. 

(Source: Giphy) 

On the other hand, to add insult to injury, Hindenburg has also claimed that despite Super Micro’s public claims of halting sales to Russia following the invasion of Ukraine, their exports to the region actually tripled. Coincidence? I think not… 

The company’s joint venture with a Chinese state-owned firm involved in defense and surveillance technology also adds another layer of complexity, where according to Hindenburg, Super Micro has been using this joint venture as a backdoor to continue doing business with sanctioned entities, aka another move that could land them in hot water with regulators. 

(Source: Giphy) 

So clearly, Super Micro is supposedly leveraging a ton of loopholes that are frowned upon when it comes to legal matters. Which is why as you might expect, investors haven’t taken this news lightly as the stock is down -2.17% on the day. 

Plus, when you combine the fact that competitors like Dell and Hewlett Packard Enterprise are breathing down Super Micro’s neck, these allegations from Hindenburg could be the tipping point that makes the full house of cards go tumbling down. 

(Source: Bloomberg) 

Now of course with all of this said, these allegations are still just… allegations. But still, until these claims are held up under scrutiny, the damage to Super Micro’s image, and its stock price, has been tarnished to some extent. And while the consensus price target sits at $842 for Super Micro, indicating a +53.4% upside from analysts, I wouldn’t be surprised if that changes dramatically over the course of this report making its rounds. 

(Source: Giphy) 

So in the end, if you’re a Super Micro Computer investor today, my condolences go out to you. Life sucks a big one sometimes, and right now it’s going to take more than just a slick PR campaign to put these skeletons back into the closet. Obviously, only time will tell what the future holds for this Big Tech giant, but for now, I’d let the storm pass on by. 

Especially considering that the track record so far indicates: The Batman of Wall Street (Hindenburg) almost always gets the last laugh. 

(Source: Giphy) 

At the time of this writing, Super Micro Computers is down -2.23% on the day (down -10.15% over the past five days). 

Stocks.News holds positions in Dell Technologies as mentioned in the article.