Equinix (NASDAQ:EQIX) stock is falling on Wednesday after Hindenburg Research slammed the digital infrastructure company in a new short report.
Hindenburg Research’s short report on Equinix takes issue with the company’s accounting practices. That includes claims that it is using adjusted funds from operations (AFFO) to manipulate its accounting.
Let’s go over some of the biggest claims made in the Hindenburg short report for Equinix below!
EQIX Stock Short Report
- Hindenburg Research alleges that Equinix overstated its AFFO by 22% just in 2023.
- The firm claims that manipulation of maintenance capex has seen a “cumulative $3 billion boost to AFFO” since 2015.
- These practices have led to $295.8 million in stock award grants to the company’s lead executives.
- Included in the short report is also Equinix overselling its power capacity to increase revenue.
- This practice relies on customers not making full use of the company’s offers to limit stress on its systems.
- One former executive claims the company oversells its data center power capacity by as much as 175%.
- This could present a problem for Equinix as artificial intelligence (AI) demands increase and put more pressure on its power systems.
- That also comes at a time when increasing competition is weighing on the company’s business model.
This extra attention has EQIX stock seeing heavy trading on Wednesday. As of this writing, more than 581,000 shares have traded. The company’s daily average trading volume is about 451,000 shares.
EQIX stock is down 2.8% as of Wednesday morning.
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On the date of publication, William White did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
