Super Micro Seeks To Raise Capital Via Equity And Debt

Artificial intelligence server company Super Micro Computer Inc SMCI has commissioned Evercore to help the company raise capital, Bloomberg cites familiar sources.

The capital raise marks the company’s attempts to prevent a potential delisting after failing to file its annual financial report by the August deadline as it evaluated internal controls over financial reporting.

According to the report, Super Micro is weighing a potential private investment in public equity (PIPE) funding to generate interest from private equity firms as well.

PIPE funding is a relatively faster way for companies to raise capital that ends up diluting equity for existing shareholders.

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However, the Street remains jittery about the sustained profitability of AI-optimized servers due to the need for high-end chips from companies like Nvidia Corp NVDA. The stock is down close to 12% at Monday premarket trading.

Super Micro’s auditor, Ernst & Young, resigned in October, flagging governance concerns triggering a sharp decline in the stock’s value. The resignation led to creating an independent special committee to investigate the allegations.

By early December, the committee completed its review and found no evidence of company management or board misconduct. Following this announcement, Super Micro’s stock surged over 30%.

Super Micro appointed BDO USA as its new auditor and submitted a compliance plan to Nasdaq to mitigate the risk of delisting. The company plans to complete all required filings by the extended deadline to retain its Nasdaq listing.

Additionally, Super Micro initiated a search for a new finance chief based on recommendations from the special committee.

Super Micro’s delayed filing of the report followed a Hindenburg Research investigation report where it had flagged issues related to accounting and governance, triggering a U.S. Department of Justice probe.

The company has yet to file its financial report for the fiscal year ending June 30 and its quarterly report for results ending September 30. Super Micro bagged an extension from Nasdaq and plans to file the documents by February 25.

Super Micro Computer stock surged 28% year-to-date, backed by the AI frenzy.

JP Morgan analyst Samik Chatterjee flagged Super Micro’s robust customer base with no major changes to order allocations, addressing market rumors about potential shifts.

The analyst also highlighted growth opportunities tied to Nvidia’s Blackwell product line, which will likely drive significant demand in late fiscal 2025, positioning Super Micro well for customized product offerings.

Price Action: SMCI stock is down 13.30% at $31.60 premarket at the last check on Monday.

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