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Super Micro Computer (NASDAQ:SMCI) joined the growing list of semiconductor companies implementing stock splits with a 10-for-1 split taking effect after the market closes on Monday. This means that for every share an investor owns, they will receive 10 shares, though the overall value of their holdings remains unchanged. The split, which will see shares trade on a post-split basis starting Tuesday, aims to lower the stock's price to make it more accessible to retail investors.
Stock splits like this are often pursued by companies with soaring share prices to attract a broader base of investors. Semiconductor stocks, in particular, have been experiencing significant gains. Despite recent market challenges, Super Micro’s stock performance has far exceeded that of the S&P 500 this year, with gains more than double the benchmark index. On Monday, the stock closed at $416.40, meaning the adjusted price after the split would be $41.64 per share. This represents a substantial drop from its August 6 price of $616.94, which would have equated to a post-split price of $61.69.
However, the split comes at a difficult time for Super Micro. Shares have fallen significantly from their record high of $1,188.07, which was achieved on March 13, marking a 65% decline. The company’s fiscal fourth-quarter results, reported on August 7, revealed a lower adjusted gross profit margin compared to the previous year. Shortly after, on August 27, short-seller Hindenburg Research released a critical report alleging several issues with Super Micro, including "accounting red flags," undisclosed related-party transactions, sanctions and export control violations, and customer concerns. The following day, Super Micro announced a delay in filing its 10-K for the fiscal year that ended June 30, raising further concerns among investors.
In response to the Hindenburg report, Super Micro denied the allegations, stating that the report contained false or inaccurate information. The company also emphasized that, despite the delay in its filing, no significant changes were expected in its fourth-quarter or fiscal 2024 results. Nevertheless, the controversy surrounding the Hindenburg report has cast a shadow over the company’s stock performance, with investors becoming wary of potential risks.
Adding to the company's troubles, on September 28, The Wall Street Journal reported that Super Micro was under investigation by the U.S. Department of Justice following the claims made by Hindenburg Research. Super Micro declined to comment on the investigation, further fueling uncertainty around the stock.
Despite these challenges, Super Micro’s stock has still gained 46% in 2024, outperforming the broader market. By comparison, the S&P 500 has risen 21% in the same period. This divergence underscores the volatility and uncertainty facing Super Micro, even as it continues to perform well overall in the semiconductor sector.
The stock split represents an effort by Super Micro to regain investor confidence by making its shares more accessible
