Super Micro Computer (SMCI) experienced a significant drop in its stock value, plummeting by as much as 26% on Wednesday. This sharp decline followed the company’s announcement of a delay in filing its annual report for the fiscal year ending June 30, 2024.

The delay comes shortly after Hindenburg Research, a well-known short seller, accused Super Micro of “accounting manipulation” among other claims. Hindenburg’s report raised concerns about the company’s financial practices, including “glaring accounting red flags” and undisclosed related-party transactions.

Super Micro cited the need for additional time to assess its internal controls over financial reporting as the reason for the delay. The company stated that filing the report within the original time frame would require “unreasonable effort or expense.”

Earlier this year, Super Micro’s stock saw an impressive rise, soaring from $290 in January to about $1,200 by March. The stock was added to the S&P 500 in March and joined the Nasdaq 100 index in July. However, since its peak in March, the stock has fallen by more than 60%, though it remains up 50% year-to-date. The company also recently announced a 10-for-1 stock split effective October 1.

Following the release of Hindenburg’s report, Super Micro’s stock fell about 2% on Tuesday. Hindenburg disclosed that it had taken a short position in the company, meaning it profits when the stock price falls. The report also mentioned a three-month investigation that uncovered various issues, including potential sanctions and export control failures.

Short sellers have significantly benefited from the drop in Super Micro’s stock price. On Wednesday alone, the 24% decline in stock value resulted in over $1.07 billion in profits for short sellers, according to data from S3 Partners. Since mid-July, short sellers have gained more than $2.85 billion in profits.

In response to the allegations, CFRA analysts downgraded Super Micro’s stock from a “Buy” to a “Hold” rating. While they acknowledged that the evidence presented by Hindenburg did not conclusively prove significant accounting malpractice, the delayed 10-K filing and potential reputational damage have raised concerns.

Hindenburg’s report also referenced a $17.5 million settlement that Super Micro reached with the SEC in August 2020 following an investigation into “widespread accounting violations.” The report claimed that the company’s business practices have not improved since then, with former executives involved in the scandal being rehired.

Super Micro Computer’s recent challenges, including the delay in its annual report and the serious allegations from Hindenburg Research, have led to a significant drop in its stock price. The situation has also provided substantial gains for short sellers, while analysts express caution about the company’s future.