HomeMarket NewsJim Cramer Advises 'Sell' on SMCI Stock as Accounting Concerns Weigh Down...

Jim Cramer Advises ‘Sell’ on SMCI Stock as Accounting Concerns Weigh Down Super Micro Computer, Down 66% in 6 Months – Insights from Technical Analysis

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Cramer Urges Sell on Super Micro Computer Amid Accounting Issues

Major Concerns Surrounding SMCI: A Call for Caution

Jim Cramer, the well-known host of ‘Mad Money’ on CNBC, has called for caution regarding Super Micro Computer Inc SMCI. He highlighted ongoing accounting irregularities as a reason investors should consider selling their shares. This warning comes as the company grapples with significant challenges since June 2024.

Details of the Situation: Cramer addressed SMCI during a recent episode of his show, emphatically stating, “Sell. It doesn’t matter, I don’t care…Accounting irregularities equal sell.”

The troubles began in mid-2024 when SMCI failed to submit its annual Form 10-K to the SEC for the fiscal year ending June 30.

On August 27, Hindenburg Research released a critical report which alleged the company engaged in accounting fraud, self-dealing, and violating sanctions. This report escalated the difficulties faced by SMCI.

The situation worsened when Ernst & Young resigned as the company’s auditor on October 30. Following this, SMCI also missed the deadline for filing its Form 10-Q for the first quarter of fiscal 2025.

To prevent being delisted from Nasdaq in November, SMCI appointed BDO USA as its new auditor and submitted a compliance plan. Yet, its problems did not end there; the company was removed from the Nasdaq 100 index on December 23.

Technical Indicators Signal Concern for Investors:

The company’s stock price reflects its recent struggles. SMCI shares have dropped 65.99% over the past six months. Recently, in premarket trading, the stock was up by 0.46% to $30.67.

A closer look at SMCI’s daily moving averages reveals a bearish sentiment among investors. On Tuesday, the stock closed at $30.53, falling below both its short and long-term moving averages.

According to data from Benzinga Pro, the eight and 20-day moving averages were $32.71 and $32.38, while the 50-day moving average registered at $31.75. Furthermore, the 200-day simple moving average stood significantly higher at $59.49, underscoring the prevailing bearish trend.

The relative strength index (RSI) for the stock is 43.78, indicating that the stock is in a neutral phase, neither classified as overbought nor oversold.

smci tech chart

In addition to Cramer’s advice, 17 analysts followed by Benzinga have rated SMCI as a ‘hold.’ Their average price target is $27.67, indicating a potential downside of 9.97% from the stock’s current price, as noted by reports from Goldman Sachs, JP Morgan, and Wedbush.

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