Super Micro Computer (SMCI) Stock Is Surging Today: What's Going On?

Super Micro Computer Inc SMCI shares are trading higher Wednesday afternoon. The company on Tuesday announced the pricing of its $2 billion convertible senior notes due 2030. Shares are recovering from a near 10% drop on Monday, when the initial debt proposal triggered investor concerns about potential stock dilution.

What To Know: In the Tuesday announcement, the company detailed its plans to limit that dilution. Super Micro is using a portion of the proceeds for capped call transactions, which effectively limit the number of shares to be issued.

The notes feature an initial conversion price of roughly $55.20 per share, a 35% premium over the company's June 23, closing price of $40.89. The cap price for the transactions is set at $81.78 per share, a 100% premium.

Super Micro expects net proceeds of $1.96 billion from the offering, with a $300 million over-allotment option. The company plans to use $158.4 million to fund the capped call transactions and another $200 million to repurchase approximately 4.9 million of its shares.

Read Also: What’s Going On With Super Micro Computer Stock?

Analyst Coverage: Based on recent analyst ratings, Wall Street has shown a mixed but recently more positive outlook on Super Micro. On May 19, Mizuho maintained its Neutral rating on the stock while increasing its price target from $32 to $40.

Earlier in the month, on May 13, Raymond James initiated coverage with an Outperform rating and a price target of $41. This followed a series of updates on May 7, where analysts expressed varied opinions. Notably, Rosenblatt maintained a Buy rating while lowering its price target from $55 to $50.

On the same day, Wedbush and Citigroup both maintained “Neutral” ratings with price target adjustments, while Needham reinstated its coverage with a Buy rating and a $29 price target.

Price Action: According to data from Benzinga Pro, SMCI shares are trading higher by 5.7% to $45.28 Wednesday afternoon. SMCI has a 52-week high of $96.33 and a 52-week low of $17.25.

Read Also: Supermicro Announces Pricing of Private Offering of $2.0 Billion of Convertible Senior Notes Due 2030

How To Buy SMCI Stock

Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.

For example, in Super Micro Computer’s case, it is in the Information Technology sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.

Image: Shutterstock