1. SMCI's gross margin declined due to high production costs. 2. Hindenburg Research reported accounting irregularities affecting SMCI. 3. SMCI's stock dropped significantly after poor financial disclosures. 4. DOJ investigation into SMCI led to further stock price decline.
The significant decline in SMCI’s stock after negative reports indicates serious investor concerns. Historical precedent shows similar issues in companies have led to persistent underperformance.
Given the implications of the lawsuit and the DOJ investigation, there’s a high likelihood of negative sentiment surrounding SMCI which can impact stock behavior significantly.
Immediate impact from lawsuit and investigations likely to affect market perception. Similar past incidents have led to prolonged scrutiny in the short to medium term.
NEW YORK, Sept. 09, 2025 (GLOBE NEWSWIRE) -- Moore Law, PLLC, a shareholder litigation law firm located on Wall Street, is investigating potential claims against:
What is the Lawsuit About?
On August 6, 2024, SMCI revealed a significant decline in its gross margin attributed to increased production costs that could no longer be passed on to customers. On this news, the price of SMCI stock declined over 20%, from $616.94 per share on August 6, 2024, to $492.70 per share on August 7, 2024.
On August 27, 2024, Hindenburg Research published a report that provided evidence of SMCI's "glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues." The Hindenburg Report further described how SMCI engaged in a fraudulent revenue recognition scheme by prematurely recording revenue for equipment that could not be delivered or installed and booking revenue for faulty or incomplete products not ready for sale. As a result, according to Hindenburg, SMCI's "gross margins have started to collapse," as reflected on August 6, 2024. In response to the Hindenburg Report, SMCI's stock price declined approximately 3%, from $562.51 per share on August 26, 2024, to $547.64 per share on August 27, 2024.
The next day, August 28, 2024, SMCI announced that it would "not timely file its Annual Report on Form 10-K for the fiscal year ended June 30, 2024." This news caused the price of SMCI stock to decline more than 19%, from $547.64 per share on August 27, 2024, to $443.49 per share on August 28, 2024.
Finally, on September 26, 2024, The Wall Street Journal reported that the United States Department of Justice had initiated an investigation into the Company. On this news, the price of SMCI stock declined more than 12%, from $458.15 per share on September 25, 2024, to $402.40 per share on September 26, 2024.
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