Super Micro Computer (NASDAQ: SMCI) shares continue to record losses as investors react to the aftermath of the delay in filing its 10-K annual report.
The delay in SMCI’s 10-K filing has raised serious red flags among investors and analysts, leading to speculation regarding the technology firm’s long-term prospects.
Such delays are often viewed with suspicion in financial markets, as they can indicate underlying problems in a company’s financial reporting or internal controls. For SMCI, this development has fueled concerns that the company may face significant accounting challenges, potentially involving revenue recognition issues, discrepancies in financial statements, or broader compliance failures.
Historically, delays in financial reporting have sometimes preceded the discovery of irregularities or fraud, leading to severe market reactions.
In SMCI’s case, the market has responded swiftly, with the stock plunging by about 25% on the weekly chart. As of the close of markets on August 30, the equity was valued at $437, reflecting daily losses of over 2%.
Expert’s take on SMCI’s stock price
The timing of this accounting issue is particularly troubling, given that it occurs when the stock is already under technical pressure. As trading expert TradingShot observed in a TradingView post on August 30, the sell-off resulted in SMCI breaking below its 50-week moving average (MA50).
This breach is particularly concerning as it coincides with a test of the lower boundary of a multi-year parabolic support zone, the “higher lows zone,” which has been in place since July 2022.
This zone has historically acted as a strong support level, helping to propel the stock to new heights. However, the current technical setup suggests that SMCI is at a critical juncture. The stock is now hovering dangerously close to its 100-week moving average (MA100). The last time this level was tested was in July 2022, and before that, during the COVID-19 flash crash in March 2020—a period of extreme market volatility.
According to TradingShot, the MA100 has proven to be a resilient support level for SMCI, holding firm even during significant market downturns. Should this level fail to be maintained, the long-term parabolic growth pattern that has driven SMCI’s price upward could be invalidated. In such a scenario, the stock could potentially decline to its 200-week moving average (MA200), estimated at around $250.
SMCI’s stock price bullish scenario
Despite the grim technical picture and ongoing accounting concerns, there is still a bullish case for SMCI. If the MA100 holds as support and the company can quickly resolve its financial reporting issues, there is potential for a substantial long-term rally. Resolving these accounting concerns would restore investor confidence and reignite bullish sentiment around the stock.
TradingShot’s analysis suggested that SMCI could embark on another positive 400% rally, potentially driving the stock to a target price of $2,000. This level represents a critical psychological growth milestone and could mark the next chapter in SMCI’s impressive upward trajectory.
As things stand, SMCI’s future hangs in the balance as it approaches a decisive technical and fundamental inflection point. The stock needs to avoid dropping below the $400 support zone while targeting $500 resistance. At the same time, if the accounting issues are resolved, the stock could likely resume its rally, building on the artificial intelligence (AI) boom.
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Source: https://finbold.com/why-smci-might-hit-2000-despite-catastrophic-sell-off/