Short selling institution Hindenburg has found a new 'prey'. On Tuesday, the research institution announced that it will short server equipment manufacturer Supermicro Computer, which is popular in the investment industry due to the boom in artificial intelligence.
Hindenburg pointed out in a report that investigations have found significant accounting manipulation, undisclosed related party transactions, evasion of sanctions and regulations, and other issues with Supermicro computers.
In 2020, Supermicro Computer was fined by the US Securities and Exchange Commission, admitting to accounting and disclosure misconduct in the 2014-2017 fiscal year and promising not to violate regulations again in the future. This also leads some observers to believe that Hindenburg's criticism of supercomputers is not unfounded.
On Tuesday, the stock price of Supermicro Computer fell by 8.7% at one point, and the decline narrowed to 2.6% at the close. A spokesperson for Supermicro Computer stated that they will not comment on false rumors and speculations.
Despite Supermicro's firm stance, the industry believes that Hindenburg's report will lead to stricter scrutiny by regulatory authorities and increased attention to Supermicro's customers, as it is currently a sensitive moment for the United States to upgrade restrictions on overseas sales of artificial intelligence.
There are problems everywhere
Supermicro Computer specializes in high-performance servers for data centers, and this business is thriving with the increasing demand for artificial intelligence, driving revenue growth for supercomputers.
In the fiscal year ending in June this year, the revenue of Supermicro Computer more than doubled to $14.9 billion. The company also expects its revenue to double again this fiscal year, reaching $28 billion. This performance news also boosted the stock price of Supermicro Computer.
Since the beginning of this year, the company's stock price has risen by over 90%. Since 2019, the stock price of Supermicro Computer has risen by an average of at least 30% annually, with an increase of 250% last year. The soaring market value and optimistic outlook also drove Supermicro Computer to be included in the S&P 500 index in March.
However, in Hindenburg's view, the hustle and bustle of supercomputers is clearly a scene of burning oil, and it is difficult to last long. According to Hindenburg, almost all of the executives who resigned from AMD in 2020 due to a scandal subsequently returned to the company, which is also the root cause of AMD's inability to improve its business practices.
According to former employees and clients of Supermicro, even after reaching a settlement with the US Securities and Exchange Commission, performance pressure still forces salespeople to deliver through means such as passing off inferior products or intentionally missing them. Hindenburg described the company as a habitual offender.
The issues pointed out in this report are likely to have a significant impact on the market share of AMD and lead to its competitors, such as HP and Dell, overtaking each other. At the same time, the troubles of AMD computers may also affect their customers and suppliers, such as Tesla, which purchases servers entirely from AMD.
Investors are still watching the impact of the Hindenburg report, but its impressive historical record, such as crushing Indian tycoon Adani and hitting the entire Indian stock market, may indicate that Supermicro Computer will find it difficult to escape unscathed this time.