Supermicro is a leading provider of server, storage, and networking solutions, with a market capitalization of over $1 billion.
The company has a history of innovation, with its products used in a wide range of industries, including cloud computing, artificial intelligence, and the Internet of Things.
Supermicro's stock has been listed on the NASDAQ exchange since 2007.
The company's stock split history is an important consideration for current and future investors.
A different take: Is Supermicro a Buy
Stock Performance
Supermicro's stock split was announced in August 2024, but by the time it was executed in October, the stock had already dropped by 33%.
The company's stock price plummeted from $616.94 to $18.01, a one-and-a-half-year low, due to a series of setbacks including allegations of revenue inflation, auditor resignation, and regulatory scrutiny.
Supermicro's stock split reduced its trading price from $416.40 to $41.64 per share, but its market cap remained nearly unchanged at $24 billion.
Shares of Supermicro plunged 13% after the company announced fiscal fourth-quarter earnings that missed analyst expectations, and a 10-for-1 stock split.
A different take: Supermicro Computers Stock
The company's gross margin dropped to 11.2% from 17% in the year-ago quarter, despite noting record demand for new AI infrastructures.
Here's a comparison of Supermicro's stock performance before and after the split:
Supermicro's stock is now trading at about one-tenth of its pre-split price, which may make it more accessible to retail investors.
Stock Split
Super Micro Computer will be splitting its stock 10-for-1, a move that will make its shares more affordable for investors. This means that existing shares will be converted into 10 new shares, each trading at a tenth of the closing price.
The stock split will take effect after the closing bell on Monday, and shareholders' overall stake in the company won't change. They'll still own the same percentage of the company, but with more shares.
Super Micro Computer shares are currently trading at around $419.74, and if the split goes through, they'll be trading closer to $41.97. This is based on the company's current price of roughly $515, which will be split into 10 shares.
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Investors may think that a lower stock price makes the company a better buy, but that's not necessarily the case. Stock splits don't change valuation multiples, which take into account the company's earnings and revenue per share.
In fact, a stock split can become a positive catalyst only if the company's stock price rises significantly beforehand. Unfortunately, Super Micro Computer's stock has been crashing lately, and its split comes at a time when there's a lot of negativity around the business.
Here are the key takeaways about the stock split:
- Super Micro Computer will split its stock 10-for-1 after the closing bell on Monday.
- Each existing share of the company will be converted into 10 new shares at a tenth of the closing price.
- Shareholders' overall stake in the company won't change.
- Super Micro Computer shares are up nearly 49% year-to-date, despite shedding roughly half their value since March.
Despite the split, investors should keep an eye on the company's fundamentals, rather than just the stock price. This will give them a clearer picture of whether the company is a good investment opportunity.
Frequently Asked Questions
Is Supermicro a buy for long term?
Supermicro is considered a promising long-term investment opportunity due to its attractive valuation and future growth potential. Its AI server leadership and robust cash flow make it an attractive buy for long-term investors.
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