Super microcomputerof (NASDAQ: SMCI) Shares closed the daily session down 8.3%. At the same time, S&P 500 (SNPINDEX: ^GSPC) increased by 0.4% on the day and Nasdaq Composite (NASDAQINDEX: ^IXIC) rose 1.2% on the session.
Shares fell today following news that Supermicro may be looking to raise capital through a share sale or new debt. The company's share price is also likely to fall due to the company's delisting Nasdaq-100 index.
After the market closed on Friday, Bloomberg reported that Supermicro had been hired Evercore and help them create new sources of capital. The report said the server major is open to taking out a new line of credit and selling new stock to raise capital. Through Evercore, Supermicro said it is approaching private equity firms to gauge investment interest. It is said that the work of raising new funds for the future is in the first stage.
If Supermicro were to sell more shares to raise cash, it would hurt existing shareholders. Selling new shares means that the company's capital structure is broken up into a larger number of pieces, each piece taking a smaller piece of the total pie.
Supermicro is taking steps to keep itself out of the program by filing a late 10-K report. Nasdaq stock exchange. If the stock is delisted from the Nasdaq exchange, the stock's trading volume will drop dramatically and its share price will likely plummet. Adding another bearish pressure, the stock will be removed from exchange-traded funds (ETFs) that track the Nasdaq and other indexes.
Supermicro has so far avoided that problem, saying it must file its 10-K with the Securities and Exchange Commission.SEC) failed to prevent the stock from being delisted from a separate index by February 25.
The Nasdaq-100 is an index of 100 largest non-financial companies traded on the Nasdaq Stock Exchange. Due to recent volatility, Supermicro has been removed from the index and replaced Palantir Technologies today. As a result of the delisting, Supermicro shares are also being removed from the ETF that tracks the index. This means that stocks are being sold by these funds, which creates a decline in the value of the stock.
While the delisting from the Nasdaq-100 doesn't mean Supermicro's long-term decline, the stock swap highlights some of the company's recent unresolved challenges.
Source link