JP Morgan Calls out Hindenburg's Bluff on Super Micro Computer (Short-Sellers Beware)

Hindenburg has earned its stripes as the stock market’s wrecking ball, tearing through overhyped companies and leaving chaos behind. 

Remember Nikola? The electric truck company that was all flash and no engine? In 2020, Hindenburg blew the whistle on their so-called "revolutionary" truck, exposing it as a total fraud. 

Nikola’s stock plunged over 40% in two days, and founder Trevor Milton went from hero to courtroom zero. Today, Nikola’s stock is down over 90%.

Clover Health? Same story, different year. In 2021, Hindenburg called them out for hiding a DOJ investigation. The result? A 12% stock dive, and now it’s down 90% from where it was.

Even Block (formerly Square) couldn’t escape. Last year, Hindenburg accused them of cooking the books, leading to a 20% drop in their stock.

Now, Supermicro is the latest victim. On Wednesday, Hindenburg aimed at the AI server maker, and the stock didn’t just wobble—it crashed 28%, wiping out nearly $4 billion in value. Investors panicked, dumping shares like hot potatoes. By day’s end, Supermicro’s stock was a shadow of its former self.

As if things couldn’t get worse, Supermicro’s CEO, Charles Liang, announced a delay in filing the company’s quarterly results with the SEC—adding fuel to an already raging fire. 

The aftermath was as ugly as expected. Analysts from heavyweights like Wells Fargo wasted no time slashing their price targets for Supermicro by over 40%. The mood on Wall Street was grim, with analysts downgrading the stock in masses, signaling a complete loss of confidence in the company’s near-term prospects.

Just when everyone thought Supermicro was down for the count, JP Morgan stepped in with a different take. While Wall Street was busy sharpening their knives, JP Morgan decided to play the contrarian and see the bigger picture.

JP Morgan thinks Hindenburg’s report is mostly old news wrapped in a new package. Those so-called “bombshells” about Supermicro’s governance and accounting? They’re like reheated leftovers from 2018-2020—nothing fresh, nothing to panic about. JP Morgan’s take? Hindenburg is just digging up skeletons that Supermicro already dealt with.

And let’s be real about the evidence—or lack thereof. JP Morgan points out that Hindenburg’s claims of shady revenue recognition and ongoing governance issues are pretty flimsy. They’re not buying it, and they don’t think you should either. Especially when you look at the bigger picture: Supermicro’s in the AI server game, a market that’s set to hit $275 billion by 2026. That’s a whole lot of pie to go around, and Supermicro’s got its slice.

JP Morgan sees this as a temporary freak-out, not the end of the world. They’re saying the market’s gone a bit overboard. Right now, Supermicro’s stock is sitting around $437, which is nearly a half-price discount considering it was trading at $1,188 back in March. With a P/E ratio of about 9 and an EPS around $28, this stock is practically on clearance. 

JP Morgan’s betting that the company’s core business is still rock solid, with plenty of room for growth. If you can tune out the noise, they see a real chance for a rebound and it’s hard for me to disagree.

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Stock.News does not have positions in companies mentioned.