Key Takeaways
- Super Micro Computer shares plunged nearly 28% Wednesday following the announcement of a capital raise targeting up to $7 billion
- The financing involves issuing 45.45 million shares at $27.50 and 75 million depositary shares priced at $50 apiece
- Capital will support component purchases for approximately $39 billion worth of AI server contracts from more than 20 clients
- Wolfe Research launched coverage with a Peer Perform rating, highlighting legal uncertainty tied to co-founder Wally Liaw’s indictment
- Shares recovered 1.37% in Thursday’s premarket session to $29.67; analysts maintain a Hold consensus with a $32.70 average price target
Super Micro Computer shares tumbled nearly 28% during Wednesday’s trading session after the company disclosed a financing initiative that could generate up to $7 billion in capital. The stock managed a modest 1.37% rebound in premarket trading Thursday, reaching $29.67, though the previous day’s steep losses continued to weigh on sentiment.
Super Micro Computer, Inc., SMCI
The capital raise consists of two simultaneous offerings. Super Micro plans to issue 45.45 million common shares priced at $27.50 per share alongside 75 million depositary shares at $50 each, with the latter linked to newly created 7.0% mandatory convertible preferred stock.
The company expects to collect approximately $1.22 billion from the common equity portion and roughly $3.68 billion from the preferred stock transaction. Combined with an active $1.25 billion at-the-market equity program, the total capital availability approaches $7 billion.
Super Micro indicated the proceeds would primarily finance component acquisitions needed to complete about $39 billion in AI server commitments from over 20 different customers. Additional funds will address debt obligations, working capital requirements, and capital spending needs.
The disclosure unsettled market participants who were already dealing with heightened uncertainty. The Defiance Daily Target 2X Short SMCI ETF jumped approximately 40% Wednesday as short sellers capitalized on the sharp downturn.
Wolfe Research Launches Coverage With Neutral Stance
Wolfe Research introduced coverage of SMCI Thursday with a Peer Perform designation, emphasizing legal and compliance uncertainties stemming from co-founder Wally Liaw’s indictment. The research firm estimates fair value between $26 and $31 per share, representing 9 to 11 times projected 2028 earnings.
Wolfe’s financial model projects 2028 revenue reaching $68.2 billion with earnings per share of $2.90. The analyst identified several headwinds including the possibility of auditor BDO USA stepping down or additional management transitions. No other company leaders have been implicated in the charges, and Super Micro maintains its partnership with NVIDIA remains strong.
While customer demand appears robust — evidenced by record-high order backlogs — Wolfe expressed reluctance to adopt a more optimistic valuation stance given the elevated risk environment.
According to InvestingPro’s valuation framework, the fair value stands at $40.03, indicating potential undervaluation at current levels. The stock has declined 37.6% during the past week alone.
Chart Analysis Points to Continued Weakness
SMCI currently trades beneath all key moving averages. The stock sits 23.4% under its 20-day average, 7.6% below the 50-day, 5% under the 100-day, and 18% beneath the 200-day moving average. Year-over-year performance shows a 32.3% decline.
A bearish death cross pattern emerged in December 2025 and remains active. The MACD indicator trades below its signal line with a negative histogram reading — a configuration that typically discourages bullish positioning.
Chart watchers are monitoring resistance in the $30 area and support near $29.50.
Mizuho maintains a Neutral stance and lifted its price objective to $44 on June 1. The Street consensus remains at Hold with an average price target of $32.70.
The post Super Micro Computer (SMCI) Stock Plunges 28% on $7B Capital Raise — Buy the Dip or Stay Away? appeared first on Blockonomi.
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