Super Micro Computer (NASDAQ: SMCI) shares collapsed 36.4% during June, according to data from S&P Global Market Intelligence, reversing a strong rally that had built heading into the month.
The sharp decline was triggered primarily by the company’s decision to raise $7 billion in capital through a combination of an equity offering and an equity-linked financing package, according to iBusiness.News.
Super Micro said the capital raise was necessary to fund equipment purchases tied to a massive $39 billion in AI server orders it had received in recent weeks prior to the announcement.
To put that order volume in context, $39 billion represents roughly an entire fiscal year’s worth of revenue for the company, making the sudden influx of demand both remarkable and financially demanding.
Despite the scale of the orders, investors reacted poorly to the dilution, and the stock sold off heavily in the days leading up to the formal announcement of the capital raise.
As a result of that pre-announcement selloff, Super Micro was forced to price its new shares at just $27.50 each, a level nearly 50% below where the stock had been trading at the start of June.
The convertible notes issued alongside the equity offering were also viewed unfavorably, carrying a 7% dividend and a strike price set between $30.30 and $36.36, terms widely considered expensive given the company’s current standing with investors.
Compounding the dilution concerns, more Super Micro employees were arrested in Taiwan during the month as part of that country’s ongoing crackdown on illegal smuggling of AI servers to China.
The arrests added another layer of uncertainty for investors already wary of the company following earlier legal probes related to export controls and a prior period of weakened investor confidence.
Broader fears around component price inflation also weighed on sentiment, with concerns growing that server suppliers will struggle to pass higher input costs on to customers, putting pressure on gross margins.
Super Micro had been staging a meaningful recovery in recent months, with margins improving and the underlying business generating strong demand, factors that had helped restore some degree of investor appetite for the stock.
The June selloff, however, suggests that institutional trust in the company remains fragile, and the market appears to have priced in the full dilutive impact of the securities sales without crediting much of the potential upside from the record order book.
