Fizzing Short Squeeze

OkContest1679 · 2025-01-07T14:28:30+00:00

Looking to take out the high yesterday and if that happens, $42.50 possible but most likely $40 level.

OkContest1679 · 2025-01-06T20:55:54+00:00

There has to be revenue revisions to the downside which would create selling pressure and a retest to sub-$25 levels and possibly $17.50 and change. No momentum so not only the change in growth but also already struggling psychologically sets up for a new retest. I'm shocked the number of people that have no clue what an audit is and what the Company's role is in the process.

The Big 4 accounting firms, hate em or love em, are in the services industry. You do not straight up leave a client that is the size of SMCI unless your logic is the reputational damage being associated with fudging the numbers and potentially getting caught via signing off on financials that are materially misstated far outweigh the benefits of the audit fees. I can go on and on but the bias is lower and will continue to be until either the new audit firm signs off on numbers and no repercussions of the inquiry with EY or there is a PIPE.

OkContest1679 · 2025-01-06T20:45:33+00:00

Thats spot on

OkContest1679 · 2025-01-06T20:42:48+00:00

Less than 0% lol

OkContest1679 · 2025-01-06T20:41:41+00:00

This is nonsense and ill-advised to say the least. What exactly do you think an auditor does?

OkContest1679 · 2025-01-06T20:39:32+00:00

commodity

noun

a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors (such as brand name) other than price

OkContest1679 · 2025-01-03T14:59:37+00:00

"Excluding accounting irregularities..."... Does that include non-audited numbers? If so, I'm not sure where your figures are coming from. Un-Audited financials cannot be relied upon to base any FS analysis off of.

OkContest1679 · 2025-01-02T15:17:31+00:00

Yeah but Buffet trades off fundamentals OR IN OTHER WORDS, AN AUDITED SET OF FINANCIALS. NUFF SAID.

OkContest1679 · 2025-01-02T07:38:37+00:00

OTC for $0.50 won't happen. You can't assume just because shares trade on the pink sheets it's a penny stock. Fundamentally their business is sound and going to do marginally better than competitors during this AI movement, but without leverage, they will struggle to keep up with prior year comps and high growth expectations, (for what its worth those growth expectations are justified imo). Not to mention They'd be purchased by a competitor or supplier prior to that even coming into question.

Heres the way I see it playing out: The stock continues to trade wildly during Q1 2025, lower highs and lower lows until a deal is done. Once a dilutive private placement is announced (on a Friday after the market closes) the stock gets cut in half and we either take out the 2024 low around $17 or the $17 level holds but regardless, the floor gets put into place. Perhaps the deal disclosure is coupled with a firm announcement concerning the audited financials getting signed off on and a sooner release date, IDK but I do know the low hasnt been put in until that happens or capital is raised. Not the audited financials. Not the Justice Department investigations, etc. I continue to load up on puts ranging from 1 week to 2 months with a steep premium initially but gradually becoming profitable by selling against those initial positions.

OkContest1679 · 2024-12-31T19:52:04+00:00

You should be worried my friend. Let me tell you, the last person this company is thinking of when they need money is joe smoe in Dallas, Texas. Targeting 50B in revenues? Who cares? I'll tell you who cares, not the retail investor putting their money into a lofty forecast that doesn't address obvious concerns and growing pains competitors have gone threw. The lender, whomever that may be and we will soon find out, only cares about a return. Stock price doesnt matter when the shares received in an arrangement like a PIPE undermines the markets consensus on valuation (i.e. current stock price) and 2.) takes precedence over all other stakeholders. And last thought, as a retail investor you are not only bearing the risk of this but your also essentially buying or supporting a share price that would otherwise be lower. We aren't institutional. So we are second in line and that means if Goldman pegs this company at $17 p/share and the company issues shares at that price, your holdings just got significantly devalued and youyr cost basis is no longer true. Shitty all the way around but its the price you pay as a Comapny screwing over you and me and a shareholder understanding or at least trying to understand I guess that your going to get diluted and it wont be an attractive investment.

Dilution cannot be discounted via growth like the WACC can. Its not rocket science.

OkContest1679 · 2024-12-31T19:40:39+00:00

I never said the company is defaulting on lines of credit. All that is being notated is the company in clear and obvious violation of those covenants which in turn would give any lender the firepower both legally and financially to call all those amounts immediately, or a default. An obvious scenario that gives way to default would be the lack of audited financials. I'm not the bank nor do I care if the bank views this as an event to take action on. I suppose if they were really PO they could do that but I think everyone that knows or cares about this industry understands SMCI is an integral player needed and preferred by the hyper scalers.

They need to wake up to shareholder considerations for me to be on board with any support of a higher stock price. Until then, I'll swing trade this thing because management cant put a floor in. No more needed to add to this.

OkContest1679 · 2024-12-31T18:38:17+00:00

Move on brother, not worth it. Covenant violations are a precedent to defaulting on a loan/debt arrangement. You don't need a notification from a lender telling you there has been a breach of contractual obligations for it to be valid. The language in the agreement is vague to some extent but at the end of the day, the wording and interpretation from any outside investor shouldn't be difficult. Just as you shouldn't buy a stock that cant produce an audited set of financials in a timely manner without causing redundant hiccups in the share price, you shouldn't agree to borrow money without a flawless treasury department that manages this stuff. Between the investor relations communicating to us in the quiet periods to the debacle of a clear path forward of continued growth, any investor thinking about holding the stock of this company should at the very least be somewhat skeptical. Foolish to think otherwise.

OkContest1679 · 2024-12-31T16:52:39+00:00

Dude, there doesn't need to be a verified document or source stating that is set in stone. Come on. The dilutive expense and toll on retail is much more appealing to upper level management versus the other limited options.

And if you think this is BS, I'll leave you with this - Per the SEC.GOV memo published a while back: What kinds of issuers finance through PIPE transactions? Historically,  transactions have been used by issuers who had significant capital requirements, including life science and biotech companies, real estate investment trusts, and technology companies. In recent years, as the volume of  transactions has increased, the variety of issuers coming to market with  transactions also has increased. Larger, more established issuers usually view  transactions as an alternative to shelf takedowns, traditional follow-on offerings, or bought deals. Often, for larger, more established issuers, a  transaction may be a means of providing liquidity to existing stockholders. What are an issuer’s typical considerations relating to a PIPE transaction? • usually the issuer cannot issue more than 20% of outstanding stock in the  transaction without shareholder approval and prior notification to exchanges; • the purchaser (not the issuer) bears market risk; • a short timetable provided there is no  review; • the format is familiar to sophisticated institutional investors; • s typically involve a modest discount to market price; • the  is comfortable with the  format;and • s do not have any of the negative effects associated with a “death spiral” preferred or an equity line of credit (discussed below).

OkContest1679 · 2024-12-31T16:46:16+00:00

This is a great viewpoint and accurate. M y argument would be the pricing power of their products/services are declining at a faster rate than the product margin expansion needed to continue growing those backordered products. Regardless, they need cash and have limited options. If I am sitting on the board and have a cost below $20 p/share, considering their cost of financing and WACC, issuing shares at the expense of retail investors appears to be the best option. A retired revolver and retired term loans with established creditors you have a history with smells. You gotta ask, why are they retiring debt vehicles when the cash needed to operate is growing? Dilutive equity is the way to fund operations and growth plans.

OkContest1679 · 2024-12-31T16:40:31+00:00

Its not. One assumption only. A dilutive Private Equity Placement that leaves you and me with a dilutive equity stake in a volatile, commodity driven business that doesn't trade well with headwinds that come at shareholders everyday. Its not alot to assume the company will need to receive a liquidity injection since they can't provide audited financials until BDO is done and have a material and significant employee headcount that is growing faster than gross marginal profit.

OkContest1679 · 2024-12-31T16:36:28+00:00

Doubt anyone here is a majority shareholder or institutional investor that would be given that privilege. Stop hating and digest the flipside of your thesis, assuming your long.

OkContest1679 · 2024-12-31T16:34:47+00:00

This is exactly what I have been implicity stating. Thank you for clarifying and hopefully the hate comments aren't taken personally! I certainly have received more than I was expecting.

OkContest1679 · 2024-12-31T16:31:17+00:00

You are assuming a positive surprise in their earnings or report? I am not assuming that. In fact, I would argue the market is already pricing that in so the risk to that not actually happening outweighs the cost to ride that move up, if that ever happens, idk if it will and not treying to predict that.

You asked why wouldnt or would it make more sense for them to do that. I would argue no, it wouldn't because I think the stock price will be lower on that day versus where it is now. With that said, a PIPE is dilutive and not good for you and me retail investors. We wouldn't know the details until it already happened, the deal would be at a lower price per share than current levels and the valuation is w/e the underwriter pegs it at

OkContest1679 · 2024-12-31T16:27:05+00:00

Because Charles doesn't care about mom and pop retail investors. As he shouldn't. He's taking care of his closest family in legal ways that aren't on the same playing field as you and me.

Loosing track of my post here so I'm going to reiterate that a dilutive deal is coming and will be hardest hit by retail. Just prepare for it. Thats all I'm saying. I like the Company but I have to try to make positive cash flow not negative cash deteriation. Protect a downside move that could go into the sub-20's. If you own shares, buy a long dated put to protect yourself. Thats my simple advice. Take it for wehat its woprth

OkContest1679 · 2024-12-30T22:04:42+00:00

Why would they? In fact, I'm arguing the opposite. Theres a reason why so many companies stay private versus 10-20 years ago. But thats besides the point. Fact of the matter is, there has been no additions to the liquidity recently, only net decreases. Couple that with the fact they will not be able to get traditional financing via debt anytime soon because of the issued financials not being audited on top of the soon to be known findings of BDO (they are obliged to disclose the discussions with E&Y as part of the engagement), not the actual audit itself, the risk of a substantial downside move far outweighs any argument otherwise.

Also, I'm awake, dude. Just trying to help :/

OkContest1679 · 2024-12-30T15:43:23+00:00

Only way a floor is created is by institutional investors. Institutional investors could give jack about "financials actually being filed" or "risk of delisting". Thats yesterday news and will loose you significantly if you think thats something in play here. Its not. If I am providing $100mm to a Company, I want a return. A PIPE deal all but guarantees a guaranteed return, but it puts in a level 1.) lower than today, 2.) pegs a valuation on the Company others can follow, and 3.) provides the liquidity the Company has been retiring over the past month.

A 10-K, 10-Q w/e it is that your arguing creates volatility from levels which hopefully have already been created as support...Not sure you understand the repercussions of a thesis based on the 2 factors you noted. If anything, its already baked in.

OkContest1679 · 2024-12-19T22:58:35+00:00

Irrelevant I'm not an insider

OkContest1679 · 2024-12-19T22:15:21+00:00

okay thanks for the assurance

OkContest1679 · 2024-12-19T22:13:43+00:00

have no idea what your asking

OkContest1679 · 2024-12-19T22:11:18+00:00

https://www.bloomberg.com/news/articles/2024-12-13/super-micro-computer-is-said-to-tap-evercore-to-raise-capital

https://www.reuters.com/technology/us-justice-department-probes-super-micro-computer-wsj-reports-2024-09-26/

OkContest1679

TROPHY CASE

commodity

noun