Actions of Super microcomputer (SMCI -10.51%)best known for making artificial intelligence (AI) servers, was down for the third straight day today as the fallout from its auditor’s resignation continued.

The stock closed down 10.5% and is now down 47% in the last three days since the news was announced.

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The financial drama continues

On Wednesday, the company announced in a statement that its accounting firm Ernst & Young (EY) had resigned. This news came after the company requested to delay its 10-K Report and suffered a short-seller attack from Hindenberg Research.

Supermicro, as the company is also known, said it does not anticipate having to restate any of its quarterly reports. The company said EY was in the process of conducting its audit for the financial year (ending June 30, 2024) and did not provide a report on Supermicro’s financial statements.

Disagreements between the two parties emerged during the EY investigation auditincluding on Supermicro’s adherence to internal control frameworks. EY told the company she resigned because she could not trust management’s representations and did not want to be associated with the company’s financial statements.

What this means for Supermicro

Management said it disagreed with EY’s decision, but the stock’s drop is not surprising. It is very unusual for an auditor to resign in the manner in which EY did. The fact that this comes after Supermicro’s delay in its 10-K report and the Hindenberg Research attack makes it even more suspicious.

The company is expected to report its first fiscal quarter winnings after hours Tuesday. If management does not give investors a satisfactory explanation for EY’s departure and does not specify when the 10-K will be completed, the stock will likely continue to decline.