Super Micro Computer's stock price fell sharply on Thursday after the Wall Street Journal reported that the Department of Justice is investigating the server maker.
Shares of the company, which sports a market capitalization of nearly $24 billion and which has been boosted by investor interest in artificial intelligence, sank $54, or roughly 12%, in afternoon trade.
The Journal cited people familiar with the matter in reporting that the Justice Department has opened a probe into Super Micro, with the investigation in its initial phases.
The agency's investigation followed a critical report in August about Super Micro by Hindenburg Research, an investment firm that specializes in short-selling, or betting that a company's stock price will fall. Hindenburg's report alleged "glaring accounting flags, evidence of undisclosed related party transactions" and other issues at Super Micro, a Silicon Valley maker of computer servers and storage technology.
According to the Journal, a prosecutor at the U.S. attorney's office in San Francisco is seeking information possibly tied to a former employee who accused the company of accounting violations and who had filed a whistleblower lawsuit against Super Micro in April. The Hindenburg report focused in part on the ex-employer's allegations.
On August 28, a day after the Hindenburg report, Super Micro said it would file its fiscal 2024 annual report with the Securities and Exchange Commission late.
Super Micro declined to comment.
In a September 3 letter filed with the SEC, Super Micro founder and CEO Charles Liang disputed Hindenburg's claims.
"You may have also heard about a recent report from a short-seller hedge fund that contains false or inaccurate statements about our company including misleading presentations of information," he said. "We will address these statements in due course."
Hindenburg and the Department of Justice did not immediately respond to requests for comment.