Investing

SuperMicro (SMCI) Is Starting To Feel Like Enron All Over Again, This Story Isn't Over

Austin Smith

Published: November 20, 2024 7:49 am

Key Points:

• Supermicrocomputer (NASDAQ: SMCI) neglected to publish its quarterly financial records, which raised questions regarding a potential delisting.
• Auditor Ernst & Young left, indicating more serious financial issues and generating investor questions.
• There are more shoes yet to drop here, and to investors who remember the collapse, the story is starting to feel like Enron
• Also: Are you ahead, or behind on retirement? Take this quiz to see for yourself. (sponsored)

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Transcript:

[00:00:00] Doug: All right, so I’m going to ask you a question, and that is, what is the greatest unforced error among major tech companies this year? What is it? Go ahead and tell me.

[00:00:15] Lee: Well, there’s a litany of them, but there’s one that’s looking bigger and bigger every day, and that’s Supermicrocomputer, who is I mean, they split the stock, it was going crazy, had it shot up to, 1, 000 and over at some point, I think the last time I looked, it was 18 and going lower.

[00:00:35] Lee: Now that is post split, like it was a 10 or 20 for one, they’re in big trouble because they’ve failed to release their quarterly documents. And then, I, well, there’s. Another one we’ll make a comparison with, but they, failed to release those. And then their auditor slash accountant Ernst and Young said, we got to go.

[00:00:58] Lee: This isn’t looking good. So I think they have until November 20th and they have to turn these documents or there’s a possibility. And this seems almost incredible to me that they could be delisted from the NASDAQ.

[00:01:15] Doug: Well, and as the trading rules on stocks that are basically over the counter.

[00:01:21] Doug: What you can do with those in terms of things like shorty, there are a number of things that you get hamstrung when these things go off the major exchanges. So that makes it even worse. but anybody who’s willing to go into this stock right now needs to have their head exams and any companies that can trip this many times make this many mistakes.

[00:01:45] Doug: It just, it’s just a question of, well, then what’s the next shoe that falls.

[00:01:49] Lee: Yeah, and it reminds me because I was there at the time, it reminds me of Enron because Enron was a slow dripping death and then the dagger, and that could be like this, and I’ll guarantee you that, and Hindenburg, the short guys, the ones that first put the hammer to this, and they rarely come out, with a report.

[00:02:15] Lee: Unless they are very convinced that their data is correct and you can bet that they’re still short.

[00:02:23] Doug: Of course they are. And, look, there is no long case to make here. There’s a speculation long case, which is I’m willing to take a bunch of money. And if it catches on fire, this burns up fine, but there’s not even a good speculative case here.

[00:02:42] Lee: Well, no, not at this juncture, because I mean, if they totally fail and do get delisted again, they can appeal the delisting. And, they can go down that road, but I mean, there’s a point when, everybody that had made money has said, I am out, I don’t want to hold this at all, and then it becomes even more difficult where do they turn and unless they’re, unless they can come up with some clean numbers fast and that, and I mean, like now.

[00:03:11] Lee: they could be in real trouble by the time December rolls around. ’cause you can bet that anybody that is still long, they’ll dump it. They will dump it.

[00:03:20] Doug: Yeah. This is, it’s not over. When you can’t get out numbers, it usually means that there’s a reason you can’t get them out. it’s not, you don’t have enough people.

[00:03:30] Lee: Well, and a big three or how many accounting firms there are left. When an Ernst Young walks away from the table, because you can bet that was pretty good money for the accounting and all of that and the regulatory stuff, you can bet that there’s a lot of, fire where that smoke is coming from.

[00:03:52] Doug: Yeah.