Super Micro Computer has been removed from the Nasdaq 100 index just five months after its initial inclusion, with the company’s stock dropping 7% following the announcement. The Nasdaq 100 includes the top 100 non-financial stocks listed on the Nasdaq, serving as the basis for the popular Invesco QQQ Trust ETF.
Recent Performance and Market Cap
The removal of Super Micro, which peaked at $118.81 in March as demand surged for its AI processor-packed servers, signifies a dramatic shift in its fortunes. At one point, the company’s market capitalization exceeded $70 billion, qualifying it for inclusion in the S&P 500. However, Super Micro’s current valuation stands at approximately $20 billion, roughly a quarter of the median market cap of Nasdaq 100 companies.
Other Index Changes
In addition to Super Micro, Nasdaq will also remove Illumina and Moderna from the index, effective December 23. The changes will pave the way for the inclusion of Axon Enterprise and Palantir Technologies, along with MicroStrategy, which has seen its stock soar nearly 600% this year due to significant Bitcoin holdings.
Challenges Faced by Super Micro
Super Micro’s troubles began in August when the company announced it would not file its annual report with the SEC on time. This prompted a short-seller report from Hindenburg Research, which alleged “fresh evidence of accounting manipulation.”
In October, the situation worsened as Ernst & Young resigned as the company’s auditor, leading to a 33% drop in stock price. An independent investigation later found no misconduct, but it recommended the replacement of the CFO. In November, Super Micro appointed BDO as its new auditor.
Despite being at risk of delisting from Nasdaq due to delayed financial reports, the company received an extension until February 2025.
Earnings Report Insights
In a preliminary earnings report, Super Micro reported an 181% year-over-year revenue increase for the third quarter, though this was below consensus expectations. CEO Charlie Liang acknowledged strong competition from companies like Dell and HPE but expressed confidence in the company’s position moving forward.
Conclusion
Super Micro’s exit from the Nasdaq 100 highlights the volatility and challenges faced by tech companies, particularly in the rapidly evolving AI market. As the company navigates its current obstacles, its ability to stabilize and regain investor confidence will be crucial for its future success.
