Super Micro Computer: Stock price plummets due to 10-for-1 stock split

Super Micro Computer, often referred to as Supermicro, recently experienced turbulence in the stock market when a report by the short-selling firm Hindenburg Research uncovered alleged "obvious accounting errors." These revelations led to a 20% drop in SMCI stock to $443 per share. The situation worsened last week following reports of a potential investigation by the U.S. Department of Justice (DOJ) into the cited accounting practices. Consequently, the stock declined by another 12%, falling below $400 per share. Despite multiple attempts to seek comments, Supermicro did not respond to inquiries regarding the purported investigation, as reported by Bloomberg. Today, the stock is showing a dramatic decrease, with a price of around $42. However, this is not due to another plunge but is the result of a 10-for-1 stock split. As of yesterday's close, the stock was priced at $416.40 per share, and the markets opened today with the significantly lower price. A stock split means that for each existing share as of yesterday, nine additional shares were created. Thus, the value of the company remains unchanged, but the price is now distributed across ten shares, making each share worth only one-tenth of its original value. Regardless of today's stock performance, the market value of Super Micro Computer remains largely unchanged at approximately $243 billion. This illustrates that the creation of more shares does not increase the inherent worth of a company. However, the future of the stock remains uncertain, especially if the DOJ investigations proceed.