Should You Buy Super Micro Computer Stock Before Oct. 1?

When a stock is in the midst of a free fall, it can be a risky time to buy in. That’s because it’s hard to know if it has bottomed out or if it’s still heading further down. It can seem like a cheap buy, but if the business is in trouble, it still may not be worth investing in it.

Super Micro Computer (NASDAQ: SMCI) was once seen as a top artificial intelligence (AI) stock. Its servers have been in high demand for companies looking to upgrade their tech capabilities, and it also provides businesses with crucial IT infrastructure. But in just the past six months, the stock, which is also known as just Supermicro, has nosedived more than 60%. Investors appear as though they can’t get rid of the stock fast enough.

But could Supermicro’s upcoming stock split help reverse its fortunes, and get its shares rallying again?

What Supermicro’s 10-for-1 split means for investors

Last month, Supermicro announced it would split its shares on a 10-for-1 basis. And Oct. 1 is when the stock will trade on a post-split basis. That means rather than trading at $400 or so per share, the stock price will be around $40 — assuming it doesn’t move a whole lot from where it is right now.

For investors, that’s about the main difference they’ll see. In your portfolio, your total investment value will remain unchanged, you’ll simply have 10 times as many shares and the price will be one-tenth of what it was before the split.

But at a lower price, some investors may be more inclined to buy shares of the company, if for instance, they aren’t able to own fractional shares, or if they just prefer not to. Beyond that, however, there isn’t an obvious benefit to a stock split — it’s just a superficial change that shouldn’t impact your decision to buy or sell Supermicro stock. Unless there’s some drastically significant news that comes out on Oct. 1, the AI stock will be just as good or bad of a buy as it was the previous trading day.