Super Micro Computer Stock Dropped 37.6% in August: Here’s Why

Actions of Super microcomputer (NASDAQ: SMCI) fell by 37.6% in August, according to data from S&P Global Market IntelligenceThe server systems maker suffered two major blows last month and its shares are now trading 64% below their peak in March.

Market-moving news

First, Supermicro reported its fiscal 2024 fourth-quarter results on August 6. The earnings came in well below Wall Street consensus estimates and management’s forecasts, as Supermicro’s cost of sales rose faster than revenue. Soaring operating expenses also weighed on its bottom line. Additionally, earnings guidance for the next quarter fell short of analysts’ average projections.

The management also announced its intention to create a 10-for-1 stock split that day, but investors focused on the disappointing bottom line. The stock closed down 20.1% the next day.

The second big drop came toward the end of the month. A popular short-selling service issued a negative assessment of the company on the same day that Supermicro announced that it would delay its 10-K filing. It’s hard to say which event hit the stock harder, but the overall effect was a 19% price drop in a single session.

Supermicro’s Long-Term Shareholders Are Still Doing Well

The triple whammy of disappointing results, late financial filings, and a critical analyst report has tarnished Supermicro’s image, but its long-term performance has still been impressive. There are 3,692 stocks in the U.S. market with at least a five-year trading history. Supermicro leads the pack with a five-year performance compound annual growth rate of 95.1%.

So don’t cry for Supermicro’s long-term investors at this point: the more recent trend chasers are the ones who had to pay the highest price.

Moreover, the stock looks reasonably affordable today, trading at 4.9 times sales and 9.5 times earnings estimates. The rise of artificial intelligence (AI) has created a sustained demand for powerful number-crunching computing systems, and Supermicro remains well-positioned to capitalize on that trend. If you steered clear of Supermicro’s surging stock earlier this year, this sharp price drop may have created the buying opportunity you’ve been looking for all along.

Should You Invest $1,000 in Super Micro Computer Right Now?

Before you buy Super Micro Computer stock, consider the following:

THE Motley Fool, Securities Advisor The team of analysts has just identified what they believe to be the 10 best stocks Investors should buy now…and Super Micro Computer wasn’t one of them. The 10 stocks we picked could deliver monstrous returns in the years to come.

The story continues

Consider when Nvidia I made this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $661,779!*

Securities Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building advice, regular analyst updates and two new stock picks each month. Securities Advisor the service has more than quadrupled THE…