Super Microcomputerof (NASDAQ: SMCI ) The share price closed the daily session down 8.3%. Meanwhile, the S&P 500 (SNPINDEX: ^GSPC) The day ended 0.4% higher, and Nasdaq Composite (NASDAQINDEX: ^IXIC) Ended the session up 1.2%.
Supermicro stock lost ground today after news that the company is looking to raise funds through a stock sale or new debt. The price of the company’s shares is also likely to be affected due to the stock being removed Nasdaq-100 index.
After the market closed on Friday, Bloomberg reported that Supermicro had hired Evercore To help raise new sources of capital. The report said the server specialist was willing to take out new lines of credit and sell new stock to raise funds. Through Evercore, Supermicro is approached by private equity firms to gauge potential investment interest. A potential new fundraising push is said to be in the early stages.
If Supermicro raises cash by selling more stock, it will have a dilutive effect on existing shareholders. Selling new shares means that the capital structure of the company will be divided into a large number of pieces, and each piece will account for a small part of the overall pie.
Supermicro is taking steps to prepare and prevent itself from being delisted from its delayed 10-K report. Nasdaq stock exchange If the stock were to be delisted from the Nasdaq exchange, trading volume for the stock would drop dramatically – and its share price would likely plummet. Adding further bearish pressure, the stock will be removed from exchange-traded funds (ETFs) that track the Nasdaq and other indexes.
Supermicro has so far been able to avoid this risk, and says it must file its 10-K report with the Securities and Exchange Commission.SEC) until February 25. But it has not prevented its stock from being removed from a separate index.
The Nasdaq-100 is an index consisting of the 100 largest non-financial companies traded on the Nasdaq stock exchange. Due to recent volatility, SuperMicro was removed from the index and replaced by Palantir Technologies As a result of today’s removal, supermicro stocks are also being dropped from ETFs that track the index. This means shares are being sold out of those funds, which creates a bearish valuation pressure for the stock.
While the delisting from the Nasdaq-100 doesn’t mean Supermicro will continue to fall for long, the stock’s turnaround highlights recent challenges for the company that have yet to be resolved.
