Here's why SMCI stock price is crashing

Stock Price Movement - The share price of Super Micro Computer (SMCI) plunged 15 02% in pre-market trading on December 16, dropping to $30 98 from $36 45 at the previous close [1] - Despite the recent drop, SMCI remains up 27% year-to-date in 2024 [1] Nasdaq-100 Index Removal - SMCI is being removed from the Nasdaq-100 Index, effective December 23, 2024, as part of the annual index reconstitution [2] - The removal could reduce the company's visibility, institutional interest, and stock momentum, potentially making it less appealing to new investors [2] - This move may also lead to lower liquidity and increased volatility, as stocks in major indices typically enjoy higher trading volumes [2] Financial and Governance Challenges - SMCI faced a challenging 2024 due to accounting concerns and questions about the firm's financial health [2] - The company delayed filing its financials, initially facing the threat of being delisted from the Nasdaq exchange [3] - Ernst & Young raised concerns about Supermicro's governance and financial reporting controls in July, prompting the board to form a special committee [3] Recovery Efforts - SMCI is exploring ways to strengthen its finances by raising new capital, potentially through selling more shares and bonds, with the assistance of investment bank Evercore [3] - The company has yet to publish the required accounts but has until late February 2025 to do so or risk being kicked out of Nasdaq [3] - SMCI is shaking up its internal leadership, appointing Kenneth Cheung as the new Chief Accounting Officer and planning to fill roles such as General Counsel, Chief Compliance Officer, and CFO [3] Uncertainty Remains - Despite positive developments, a high degree of uncertainty remains as these measures have yet to bear fruit [4]