Hindenburg Bombshell: Super Micro Computer Faces Potential Legal Action

Recently, the US Department of Justice (DOJ) began investigating Super Micro Computer, which is one of the leaders in the US AI server market.

The company came under fire due to allegations of accounting manipulation by short-seller Hindenburg Research.

Super Micro’s stock price tumbled by 12% on September 26, 2024, as the news of the investigation broke out.

Accounting Irregularities Allegations

According to the Wall Street Journal, a US attorney from the San Francisco office has begun contacting some people who may know useful information in the case. This inquiry comes with charges hurled against the company by a former employee over accounting violations.

Hindenburg Research Report on Super Micro

The DOJ just launched the investigation that comes on the back of a recent August report by Hindenburg Research. The report claimed to have found "fresh evidence of accounting manipulation" within Super Micro.

Hidenburg’s report was based on a three-month investigation into the company. It included interviews of former senior employees and a review of litigation documents. The report brought to light undisclosed related-party transactions and export control violations.

Stock Impact on Super Micro

Super Micro delayed filing its annual report to the Securities and Exchange Commission following the report. The company cited that it needs time to review its internal financial controls. Though the company denied the allegations, Super Micro's shares plunged sharply as investors grew concerned.

Super Micro's Participation in AI and Market Boom

AI applications require high-performance servers that are manufactured by Super Micro. The company has enjoyed great benefits from the AI boom, considering its clientele list includes tech giants like Nvidia, AMD, and Intel.

Super Micro's market value skyrocketed to US$67 billion from US$4.4 billion in early 2022 due to increased demand for AI technologies. However, now its future looks grim.

DOJ and Super Micro Have Not Issued Any Official Comments

Neither Super Micro nor the Department of Justice offered any comment on the current probe. While Super Micro declined to comment on questions about an investigation, the DOJ said it could neither confirm nor deny at the time that an investigation existed.