Super Micro Computer, which joined the Nasdaq 100 in July, is being removed from the index after just five months. Following the announcement, its stock dropped by 8%.
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| Annabelle Chih | Bloomberg | Getty Images |
Nasdaq 100 Changes
The Nasdaq 100 comprises the top 100 nonfinancial stocks on the Nasdaq and serves as the basis for the Invesco QQQ Trust, one of the most traded exchange-traded funds (ETFs).
Alongside Super Micro, Illumina and Moderna are also being removed from the index, effective December 23. Replacing them will be Axon Enterprise, Palantir Technologies, and MicroStrategy, whose significant bitcoin investments have driven a 500% stock surge this year.
Roller-Coaster Year for Super Micro
Super Micro experienced a volatile year, reaching a record high stock price of $118.81 in March, driven by soaring demand for its AI-powered servers. At its peak, the company boasted a $70 billion market cap, qualifying for inclusion in the S&P 500.
However, the company's value has since plummeted to approximately $20 billion, far below the median market cap for Nasdaq 100 companies.
Financial Reporting Issues and Short Seller Allegations
The company’s troubles began in August when it delayed filing its annual report with the SEC. Hindenburg Research, a noted short seller, disclosed a short position in Super Micro and accused it of “accounting manipulation.”
In October, Ernst & Young resigned as the company’s auditor, triggering a 33% stock drop. A three-month independent investigation found no evidence of misconduct but recommended replacing the CFO. In November, Super Micro appointed BDO as its new auditor.
Nasdaq Listing and Financial Updates
Super Micro narrowly avoided delisting from Nasdaq due to its delayed financial reports, receiving an extension until February 2025. In its preliminary Q3 earnings report, the company announced a 181% year-over-year revenue increase, falling short of analyst expectations.
CEO’s Optimism Amidst Competition
Despite these challenges, CEO Charles Liang expressed confidence during a November conference call, stating, “Competition is strong, but I believe we are in a good position.” The company faces competition from industry leaders like Dell and HPE.
Super Micro’s removal from the Nasdaq 100 reflects its turbulent year, marked by rapid growth, setbacks, and efforts to regain investor confidence.
