Super Micro Computer (Nasdaq: SMCI) witnessed a significant drop in its stock price during after-hours trading on Wednesday following the resignation of Ernst & Young (EY) as the company’s auditor.
The resignation led to a more than 30% decline in Super Micro Computer’s shares, raising concerns among investors regarding the accounting practices of the AI server manufacturer.
The share price settled at $33.07 per share after a drop by 32.68%. SMCI continued to drop in after-hour trading by 2.57%.
In late August, the company postponed the submission of its annual report as it needed to evaluate its internal controls over financial reporting, prompted by allegations of accounting manipulation by Hindenburg Research.
Super Micro revealed that EY had expressed concerns in late July about governance, transparency, and internal controls over financial reporting, leading to the formation of a special committee for an investigation. EY ultimately chose to step down following new revelations from the review process.
Meanwhile, Super Micro expressed disagreement with the accounting firm’s determination and anticipates that the concerns raised by EY will not lead to any revisions in its quarterly reports for fiscal 2024 or earlier fiscal years.
During the surge in the generative AI sector, Super Micro experienced significant success as companies invested in the technology essential for applications like ChatGPT. The company’s market capitalization escalated from around $4.4 billion in early 2023 to a pinnacle of $67 billion in March, before facing a decline in recent months.