Super Micro Stock Under $20 After Brutal 33% Rout. Time to Buy?If only there was a way to track where things went wrong.
The board of directors at Super Micro NASDAQ:SMCI got together one day in the boardroom and decided it’s a good idea to bring back the same executive who had already resigned once over an accounting scandal.
They voted to hire him as a consultant and later promoted him to senior vice president. Then put him back on the board.
That executive has now been arrested for allegedly smuggling $2.5 billion worth of Nvidia NASDAQ:NVDA AI chip servers to Chinese customers. And cost the company $6 billion in wiped out market cap on Friday. The Netflix NASDAQ:NFLX documentary practically writes itself.
Super Micro Computer stock NASDAQ:SMCI dropped 33% on Friday after the news dropped during pre-market trading. With pre-market Monday prices at $19 (another 4% implied drop), it sits more than 84% below its all-time high of $123 from March 2024.
The question the market is now chewing on: is this a buying opportunity, or is it a value trap?
🚨 What Actually Happened
The US Attorney's Office for the Southern District of New York charged Wally Liaw, a Super Micro co-founder and board member, along with a Taiwan-based company employee and a contractor named Willy Sun, with violating US export controls.
The allegation is that the three conspired to ship Nvidia AI chip servers to Chinese customers, sidestepping the restrictions successive US administrations have placed on advanced chip exports to China.
Liaw and Sun have been arrested. A third defendant, Steven Chang, a Super Micro sales manager based in Taiwan, "remains a fugitive," according to the Department of Justice.
Super Micro itself is not named as a defendant in the indictment, which is a meaningful legal distinction, though the market on Friday was in no mood for nuance.
📜 Liaw's Remarkable Track Record
Here is where the story earns its documentary potential. This is, remarkably, Wally Liaw's second act at Super Micro.
He first resigned in 2018, alongside the company's finance chief, following an audit committee investigation that led Super Micro to restate its financial results.
In 2020, the company paid $17.5 million to settle SEC allegations of widespread accounting violations. Liaw returned as a consultant in 2021, was promoted to senior vice president in 2022, and was reinstalled as a board member in late 2023.
The due diligence conversation that preceded that board reappointment would be an interesting one to read.
📉 A Stock That Knows How to Fall
Super Micro is no stranger to turbulence. In 2024, the company delayed its annual report filings following another accounting investigation, triggering a Nasdaq delisting warning .
A short seller report alleging financial irregularities landed around the same time. Its auditor resigned . The stock spent most of the past two years absorbing one headline after another.
Heading into Monday’s open, shares were lower by 50% over the prior twelve months. Under $20, it is trading at a fraction of the valuation that briefly made it one of the most talked-about AI infrastructure plays in the market.
🤔 So, Time to Buy?
All things considered, Super Micro is a real business. It packages Nvidia's AI chips into servers and sells them to major US tech groups, sitting at a genuinely useful point in the AI infrastructure supply chain.
The problem is there have been patterns. Accounting restatements, SEC settlements, auditor resignations, delisting warnings, and now a criminal indictment involving a co-founder.
Each of these events, taken alone, might be survivable. Together, they describe a company with a structural governance problem that keeps expressing itself in new and creative ways.
Value investors will point to the price. The stock, at $12.3 billion, is cheap relative to where it was. Risk-tolerant traders might see a bounce from oversold levels, a technical term for when selling has been so aggressive that a short-term recovery becomes statistically likely even without good news.
At this point, the honest answer is that this is a speculation, not an investment, until Super Micro demonstrates that the board overhaul is real, the accounting is clean, and the next headline is something different than arrests or manhunt.
At $20, the risk-reward is not obviously wrong. It’s a huge drop after all, with the stock ranking third on the “Biggest losers” board on Friday. The risk-reward is genuinely unknown, and those are very different things.
Off to you : Are you looking to buy the huge dip at today’s opening bell? Or do you expect it to drop some more? Share your views in the comments!
