Super Micro Computer Inc. ( SMCI ) experienced a 7.18% drop in pre-market trading on Wednesday, as per Benzinga Pro. This decline occurred despite reassurances from CEO Charles Liang that the company's stock would not be delisted from Nasdaq.

What Happened: During the Reuters NEXT conference in New York, Liang expressed confidence that Super Micro would meet the Nasdaq deadline of February 25 to file its overdue financial reports. The company recently received a letter from Nasdaq granting an exception to its rules, allowing more time to submit these reports.

The drop in stock also coincides with J.P. Morgan analysts noting an underweight rating on the stock, setting a one-year price target at $23 per share. However, they also noted that orders for Super Micro’s servers remain strong, despite the controversies.

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J.P. Morgan analysts, after meeting with Super Micro’s management, reported no significant loss of orders to competitors. The company plans to launch new products in 2025 and expects to scale up production at its Malaysia plant in the first half of next year.

The server manufacturer had previously benefited from the surge in demand for AI infrastructure, but its shares were affected by an auditing scandal. 

Why It Matters: The recent stock volatility of SMCI can be traced back to a series of events that have shaken investor confidence. In late October, the company’s independent auditor Ernst & Young resigned, citing concerns over governance and transparency. This led to delays in the filing of its financial reports, causing uncertainty among investors.

On Tuesday, Super Micro shares initially surged by 10% in pre-market trading following the announcement of an extension from Nasdaq for filing its overdue reports. However, the excitement was short-lived as the stock continued to decline, reflecting ongoing investor concerns about potential demand weakness due to the financial reporting delays. The company’s ability to navigate these challenges and reassure investors will be crucial in stabilizing its stock performance.

Meanwhile, as per the three recent analyst ratings collated by Benzinga Pro, namely Goldman Sachs, JP Morgan, and Wedbush, the average price target for SMCI is set at $27.67.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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