21 March 2024 – Hindenburg Research revealed its short position in Equinix, alleging the data center firm of misleading investors by inflating profitability metrics. Equinix’s stock dropped nearly 5% as Hindenburg claimed the company misclassified capital expenditure to boost adjusted funds from operations (AFFO), resulting in a $3 billion increase since 2015.
Equinix, operating over 260 global facilities, faces scrutiny for its accounting practices. Despite its recent 22% share price surge, Equinix is under investigation for allegedly presenting a misleading financial picture. The company’s stock trades at 69 times the 12-month forward earnings estimates, according to LSEG data.
Brokerage TD Cowen dismissed Hindenburg’s concerns, calling them a re-hash of a previous thesis. However, the short-seller warns of potential threats from increased electricity consumption and competition from cloud giants like Amazon.
Equinix, while investigating Hindenburg’s claims, is confident in its business model and optimistic about future growth, especially with the boom in generative AI expected to drive demand for data centers. Analysts remain divided on the impact of Hindenburg’s accusations, with some seeing it as a buying opportunity amid industry growth projections.
