- Retail traders on Stocktwits discussed the company’s strong market position and potentially limited impact from the smuggling controversy.
- Sentiment for SMCI has held up in the ‘extremely bullish’ zone all week.
- On Friday, the U.S. unsealed an indictment against Super Micro staff alleging illegal export of Nvidia chips to China.
A steady rebound in Super Micro Computer following last Friday’s selloff triggered by a chips smuggling controversy appears to be waning. Still, retail traders remained upbeat. SMCI shares declined 3.3% in the premarket session on Thursday; they had ended in the green in the first three sessions this week, cumulatively gaining 17.4%.
Last Friday, the justice department unsealed an indictment against Super Micro co-founder Yih-Shyan “Wally” Liaw and two people working with the company for allegedly diverting Nvidia servers to Chinese customers in violation of export rules. The stock fell by over 33% that day.
Since then Super Micro has said Liaw had stepped down from the board and the two workers were removed, and maintained that the company was not named in the indictment by U.S. prosecutors. Still, some analysts have flagged risks, including potential restrictions from the government or customers cutting back on orders.
Reuters reported on Wednesday that certain Super Micro shareholders had filed a proposed class action, alleging that the company overstated its business prospects and inflated its stock price by knowingly failing to disclose that a significant portion of server sales went to companies in China.
Several analysts have lowered their price targets on the stock amid the fallout. On Wednesday, Rosenblatt lowered its target on SMCI to $32 from $50, while keeping a ‘Buy’ rating. The firm said the controversy surrounding Liam, along with a U.S. Attorney’s indictment alleging export-control violations, “puts a dark cloud over what would otherwise have been an exciting product announcement.”
The analyst still views the company’s technology capabilities as “among the world leaders.” Additionally, the firm noted that Super Micro’s order backlog remains “sound” and said it does not expect to revise estimates due to the employee indictments. However, it expects the stock to stay under pressure until the investigation is resolved.
Retail’s Latest View On SMCI
The sentiment among retail traders has, however, been positive. On Stocktwits, retail sentiment has climbed higher in the ‘extremely bullish’ zone through the week, with many arguing that the company has strong fundamentals and the impact from the indictment would be limited.
“$SMCI this stock now based on growth and valuation should be a minimum of $50 now,” said a user. this is why it has gone up since Friday’s unwarranted drop; it’s a $50 stock that went below $20 because of companies like Goldman Sachs, JP Morgan, Hedgefunds, Lamestream News and the retarded retail short bears.
Another user echoed the view: “The DOJ explicitly cleared the company of wrongdoing, and the market is still pricing it like a dying business — which is absurd. At these levels, SMCI isn’t just undervalued; it’s a coiled spring with asymmetric upside that shorts will not be able to contain once momentum returns.”
The view, however, was divided on Wall Street. Half of the analysts covering the stock recommend ‘Hold,’ while five recommend ‘Buy’ or higher and four recommend ‘Sell’ or lower, according to Koyfin. Their average price target of $34.53 implies a 43% upside to the stock’s last close.
For updates and corrections, email newsroom[at]stocktwits[dot]com.