Is It Time to Sell Super Micro Computer Hand Over Fist After Its Latest News?
For listed companies, it's always best to wait for the frenzy of the stock market to subside when announcing negative news. That seemed to be the case after market close Thursday when Super Micro Computer (NASDAQ: SMCI) announced a major new secondary stock issue; the following day, investors expressed their displeasure by trading down the shares. Let's take a brief look as to whether this was justified.
If successful, Supermicro estimates that the flotation will bring in gross proceeds of $524 million. Somewhat atypically for a company announcing a fresh stock issue, this one went into detail about how it will use those monies. It said they will be utilized to "support our operations, including working capital needs, manufacturing capacity expansion, and increased [research and development] investments."
It's hard for any investor to take issue with that. After all, Super Micro operates in the high-end, specialty hardware segment of the tech industry. It requires gobs of capital to develop cutting-edge solutions that meet the demands of a sector constantly in need of the best and most reliable technology. This goes double for the current artificial intelligence (AI) gold rush, in which many companies are scrambling to compete.
Source Fool.com
