Key Takeaways
- Super Micro Computer shares plummeted nearly 28% Wednesday following disclosure of a financing arrangement potentially totaling $7 billion
- The capital raise involves issuing 45.45 million shares at $27.50 alongside 75 million depositary shares priced at $50
- Capital will be deployed to secure components for approximately $39 billion worth of AI server contracts spanning more than 20 clients
- Wolfe Research launched coverage with a Peer Perform designation, highlighting legal uncertainties stemming from co-founder Wally Liaw’s indictment
- Thursday premarket trading showed SMCI rebounding 1.37% to $29.67; analyst consensus remains at Hold with a mean price objective of $32.70
Super Micro Computer experienced a dramatic selloff Wednesday, shedding nearly 28% following the announcement of a capital raising initiative that could deliver up to $7 billion. The shares recovered modestly in Thursday’s premarket session, climbing 1.37% to reach $29.67, though the previous day’s losses remained substantial.
Super Micro Computer, Inc., SMCI
The capital structure plan encompasses two simultaneous offerings. Management plans to issue 45.45 million shares of common stock priced at $27.50 per share, complemented by 75 million depositary shares at $50 each. The depositary shares are connected to newly created 7.0% mandatory convertible preferred equity.
Expected net proceeds stand at approximately $1.22 billion from the common equity component and $3.68 billion from the preferred stock-related transaction. Combined with a previously established $1.25 billion at-the-market facility, the aggregate potential capital raise approaches $7 billion.
Super Micro disclosed that proceeds will be allocated toward acquiring components necessary to execute roughly $39 billion in artificial intelligence server orders secured from over 20 customers. Additional funds will address debt obligations, operational capital requirements, and infrastructure investments.
The disclosure triggered significant investor anxiety. The Defiance Daily Target 2X Short SMCI ETF jumped approximately 40% Wednesday as short-focused traders capitalized on the downturn.
Wolfe Research Launches Coverage With Neutral Stance
Thursday brought new coverage from Wolfe Research, which assigned SMCI a Peer Perform rating while emphasizing legal and compliance uncertainties following co-founder Wally Liaw’s indictment. The firm established a fair value range between $26 and $31 per share, representing 9 to 11 times projected 2028 earnings.
Wolfe’s financial model anticipates 2028 revenue reaching $68.2 billion with earnings per share of $2.90. The analyst highlighted downside scenarios including potential departure of auditor BDO USA or additional executive transitions. No other leadership members have been implicated in the indictment, and Super Micro maintains its NVIDIA partnership remains strong.
Customer demand appears robust — the firm observed that order backlog has reached unprecedented levels. However, Wolfe indicated the risk environment remains too clouded to justify a more optimistic valuation stance currently.
InvestingPro’s valuation framework suggests fair value at $40.03, implying the current market price represents a discount. The equity has declined 37.6% over the trailing week.
Technical Indicators Signal Continued Weakness
SMCI currently trades beneath all primary moving averages. The stock stands 23.4% under its 20-day average, 7.6% below the 50-day, 5% beneath the 100-day, and 18% under the 200-day moving average. Year-over-year performance shows a 32.3% decline.
A death cross materialized in December 2025 and persists. The MACD indicator remains below its signal line with negative histogram readings — unfavorable conditions for long positions.
Chart watchers are monitoring resistance levels near $30 with support established around $29.50.
Mizuho maintains a Neutral stance and elevated its price objective to $44 on June 1. The Street’s aggregate recommendation stands at Hold with an average target price of $32.70.
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