SMCI Reports - Stock Price Goes KaBoom!

Investing Strategies Abandoned Arctic Outpost #13
1

Here is what the market was expecting:

https://seekingalpha.com/news/4134072-super-micro-computer-q4-earnings-on-deck-what-to-expect#source=section%3Asummary|section_asset%3Aall_news|first_level_url%3Asymbol|button%3ATitle|lock_status%3ANo|line%3A3

Here is what the market got:

https://seekingalpha.com/news/4135339-super-micro-computer-reports-mixed-q4-results-initiates-q1-and-raises-fy25-outlook#source=section%3Asummary|section_asset%3Aall_news|first_level_url%3Asymbol|button%3ATitle|lock_status%3ANo|line%3A2

To Wit:

The Good and The Bad:

For the period ending June 30, Super Micro earned $6.25 per share on an adjusted basis as revenue rose more than 100% year-over-year to $5.31B.

Analysts were expecting the Charles Liang-led firm to earn $8.14 per share on $5.3B in revenue.

The Really Bad:

Sources say "the report was “mixed” and cited margin compression worries that raise concerns about the company’s “value add and pricing power.”

More Good:

For the coming quarter, Super Micro anticipates earning between $6.69 and $8.27 per share on an adjusted basis, with sales forecast to be between $6B and $7B. Analysts were anticipating earnings of $7.68 per share on $5.47B in revenue for the first quarter.

The MEH:

In addition, Super Micro’s board of directors authorized a 10-for-1 stock split, effective October 1.

The UGLY:

Fan Reaction: Big 15+% Sell Off in AH Trading.

Not sure whether this is a classic case of ‘What Goes Up - Must Come Down’ or whether the expectations just got swept away in AI exuberance. Either way - I don’t think this story is over; although, tomorrow could be a little painful for SMCI investors. Heck - maybe more than a little.

All the Best,

15 Likes
2

Sell on news is still around. And a limit order placed 10% below market just before earnings announcement will sometimes fill. No telling how long recovery will take. Sometimes minutes or months.

3

I would rather buy NVDA. From AMD, PLTR, and SMCI calls, it is clear AI trend is still in tact. While SMCI is squeezed by the likes of Dell, HP, it doesn’t change the story for NVDA.

That’s my 2 cents, of course I am not rushing to buy NVDA. :grin: :grin:

3 Likes