Super Micro Computer Faces Tumultuous Week Amid DOJ Investigation and Upcoming Stock Split

Super Micro Computer, commonly known as Supermicro, is experiencing a highly turbulent period, marked by two significant developments. First, the company is reportedly under investigation by the U.S. Department of Justice (DOJ) over potential accounting misconduct. Second, Supermicro is preparing for a 10-for-1 stock split, set to occur next week.

On the news front, Supermicro (Nasdaq: SMCI) saw its shares tumble more than 12% following reports of the DOJ probe. Here’s an overview of the key issues:

DOJ Investigation The Wall Street Journal recently reported that the DOJ is investigating Supermicro’s financial practices, although neither the DOJ nor Supermicro has officially confirmed this inquiry. The investigation is thought to be in its preliminary stages.

The likely catalyst for this investigation was a report from Hindenburg Research, a well-known short-selling firm. In late August, Hindenburg accused Supermicro of accounting irregularities, sanctions violations, and undisclosed related-party transactions. After the report’s release, SMCI shares nosedived by nearly 20%, dropping from $557 on August 27 to $443 the next day.

With the additional pressure of a possible DOJ probe, Supermicro’s stock fell another 12%, and shares are currently trading around $396 in premarket activity.

Stock Split Amid these developments, Supermicro is moving ahead with its planned stock split, which was announced in early August, prior to the Hindenburg report. The split will be a 10-for-1 division, meaning shareholders will receive 10 shares for each one they currently hold, but the value of each share will be reduced to one-tenth of its original price.

The split is scheduled to occur after trading closes on Monday, September 30, with the adjusted shares trading on Tuesday, October 1. While stock splits often provide a clearer estimate of the new trading price, the ongoing uncertainty surrounding the DOJ investigation could lead to volatile pricing. If SMCI shares remain near their current value of $400, post-split shares may trade around $40 each.

Supermicro’s AI-powered server technology is widely used across sectors such as healthcare, retail, and manufacturing, making the outcomes of both the stock split and DOJ probe significant for its future.