Super Micro Computer's shares plummeted over 20% to a seven-month low following a report from Hindenburg Research, which announced a short position and alleged accounting anomalies after a three-month investigation.

The report raised serious concerns about potential accounting manipulation and highlighted the company's dealings with Fiberhome, a Chinese state-run telecommunications firm, which amounted to approximately $196 million since 2020.

In light of these allegations, Super Micro announced an expected delay in filing its Annual Report on Form 10-K for the fiscal year ending June 30, 2024, citing the need for additional time to assess its internal controls over financial reporting.

Despite reporting a remarkable topline growth of 144% in the fourth quarter, Super Micro has faced declining margins due to rising server production costs and fierce competition from rivals like Dell.

The company's market position has been further threatened as major technology firms have begun distancing themselves due to quality concerns and unmet service commitments.

Hindenburg's report also alleged that Super Micro expanded its business with sanctioned Russian entities, with exports to Russia reportedly tripling since the onset of the Ukraine war.

In defense of Super Micro, J.P. Morgan indicated that there is limited evidence of accounting issues beyond previous SEC charges, suggesting that the company may still have a path to recovery.

However, analysts remain skeptical about Super Micro regaining investor trust in the near future, predicting that it could take months for any margin improvements to become evident.

The company emphasized the need for additional time to evaluate the effectiveness of its internal controls over financial reporting as of June 30, 2024, amidst ongoing scrutiny.

Despite the recent downturn, Super Micro's stock has nearly doubled in value since the beginning of the year, although it remains down over 50% from its peak in March.

Investors are advised to monitor key price levels at $479, $357, and $260 as potential support areas, especially given the ongoing volatility in the stock's performance.

The company's significant investments in liquid cooling technology have contributed to its sales growth, particularly as AI infrastructure demands effective cooling solutions.