Super Micro Computer (NASDAQ: SMCI) has had a tremendous year, as the stock has increased around 160%. But it’s well off its all-time highs set just over a month ago. In early March, Super Micro Computer hit an intra-day high of $1,229, a far cry from the $700 mark it trades at now.
Many investors may wonder if it’s time to get back into Supermicro’s stock, especially after the $200 per share drop it experienced on April 19.
Supermicro’s recent tumble occurred for a ridiculous reason
Supermicro has had an amazing year thanks to the business it’s operating in. It’s a leader in the highly customizable computing server industry, which is experiencing a boom because of artificial intelligence (AI). While there are many competitors in this field, few offer the customizability that Supermicro does, as its product lines allow customers to specify their computing load sizes and specialty. So, whether a client wants to dedicate their server to running large workload AI models or smaller engineering simulation workloads, Supermicro has them covered.
But none of that explains why the stock has dropped so aggressively as of late, as its business is doing fantastic. In fact, management expects revenue to grow at a 219% pace in the third quarter of fiscal year 2024 (ended March 31).
We’ll find out more on April 30, but that’s all investors know right now. And therein lies the problem.
The last time Supermicro announced its earnings report date, it pre-reported earnings. Companies usually elect to pre-report earnings if there is significant news that could drastically move the stock — whether good or bad. The second-quarter report was full of great news and included Supermicro exceeding management’s guidance of 50% to 61% growth drastically, as revenue rose 103%.
The Q3 earnings announcement did not hint at results, so investors can only assume the results were in line with expectations. This is a problem, as the stock was trading in an area that required an earnings beat.
The stock is the most attractive it has been in months
Because Supermicro is a profitable business, we’ll use…
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