Super Micro slides 7% after stock is dropped from Nasdaq 100

Super Micro Computer joined the Nasdaq 100 in July. Five months later, it's out, and the stock is down 7% on the news.

Nasdaq said late Friday that Super Micro is being removed from the index, which is made up of the top 100 non-financial stocks on the Nasdaq and is the basis for the Invesco QQQ Trust exchange-traded fund, one of the most actively traded ETFs.

The announcement is the latest in a roller coaster of a year for Super Micro, which rocketed to a record high of $118.81 in March, as demand soared for the company's servers packed with artificial intelligence processors. The company's market cap reached over $70 billion, high enough to merit inclusion in the S&P 500.

Super Micro is now worth about $20 billion, about a quarter the size of the median market cap of companies in the Nasdaq 100. Nasdaq will also remove Illumina and Moderna from the group, effective Dec. 23.

The revision will make room for the additions of Axon Enterprise and Palantir Technologies, as well as MicroStrategy, a company whose value is tied to its billions of dollars worth of bitcoin purchases. MicroStrategy shares have gained almost 600% so far this year and were up 4% on Monday.

For Super Micro, the story started to turn in August, when the company said it wouldn't file its annual report with the SEC on time. Noted short seller Hindenburg Research then disclosed a short position in the company, and said in a report that it identified "fresh evidence of accounting manipulation."

In October, Ernst & Young resigned as Super Micro's auditor, resulting in a 33% stock plunge. An independent special board committee evaluated concerns from Ernst & Young and found no misconduct following a three-month investigation. The report recommended the company replace its CFO. The company said in November that BDO was its new auditor.

Super Micro was at risk of being delisted from Nasdaq altogether for a second time because of its delayed financial reports, but two weeks ago it received an extension until February 2025.

In a preliminary earnings report, the company said revenue for the third quarter was up 181% year over year, below consensus.

"Competition is strong, but I believe we are in good position," CEO Charlies Liang said during a November conference call with analysts. Rivals include Dell and HPE.

WATCH: Super Micro appoints BDO as independent auditor