Super Micro shares drop 8%, the company joined the Nasdaq 100 in July, but just five months later, it has been removed from the index, causing the stock to drop 8% in response to the news.
 

Super Micro Removed from Nasdaq 100

The Nasdaq announced late Friday that Super Micro will be removed from the index, which consists of the top 100 non-financial stocks on the Nasdaq and serves as the basis for the Invesco QQQ Trust, one of the most actively traded exchange-traded funds (ETFs). This decision marks another significant turn in a tumultuous year for the company.

Earlier this year, Super Micro’s shares soared to a record high of $118.81 in March, fueled by a surge in demand for its AI-powered servers. Super Micro stock surged 31% on November 19. This impressive growth propelled its market capitalization to over $70 billion, making it a candidate for inclusion in the S&P 500. However, the company's fortunes have since taken a dramatic turn.

As of now, Super Micro's market value has plummeted to approximately $20 billion, which is roughly a quarter of the median market capitalization of companies in the Nasdaq 100. The Nasdaq's decision also includes the removal of Illumina and Moderna from the index, effective December 23, further reshaping the landscape of this key benchmark.

The challenges for Super Micro began in August when it announced a delay in filing its annual report with the SEC. Shortly thereafter, short-seller Hindenburg Research disclosed a short position and alleged accounting irregularities. In October, the resignation of Ernst & Young as the company's auditor led to a significant stock drop of 33%.

Despite these setbacks, Super Micro reported a 181% year-over-year revenue increase for the third quarter, albeit below market expectations. CEO Charles Liang remains optimistic, stating, "Competition is strong, but I believe we are in a good position," as the company navigates a competitive landscape that includes major players like Dell and HPE.


The recent changes will pave the way for the inclusion of Axon Enterprise, Palantir Technologies, and MicroStrategy, a firm significantly connected to its extensive bitcoin investments. MicroStrategy's stock has skyrocketed over 500% this year, maintaining stability in Monday’s trading.
 

Challenges and the Path Forward Amid New Additions to Nasdaq 100

Super Micro’s difficulties began in August when it announced it would delay filing its annual report with the SEC. This announcement raised concerns among investors, and shortly thereafter, short-seller Hindenburg Research disclosed a short position against the company, asserting it had uncovered evidence of accounting manipulation. This revelation intensified scrutiny on Super Micro, leading to a loss of investor confidence.

In the wake of these challenges, Super Micro faced additional setbacks. In October, Ernst & Young resigned as the company’s auditor, triggering a dramatic 33% drop in its stock price. The resignation was tied to concerns surrounding the company’s financial practices, further compounding the negative sentiment among investors. An independent committee was formed to investigate Ernst & Young's claims, ultimately finding no misconduct. However, the report recommended that Super Micro replace its Chief Financial Officer, adding to the uncertainty surrounding the company’s leadership.

Despite these hurdles, Super Micro reported a remarkable revenue increase of 181% year-over-year for the third quarter, although this figure fell short of market expectations. CEO Charles Liang expressed cautious optimism during a conference call, stating, “Competition is strong, but I believe we are in a good position.” He acknowledged the competitive landscape, which includes major players like Dell and HPE. As Super Micro navigates these turbulent waters, its ability to regain investor confidence and stabilize its operations will be critical for its future success.