Charles J. Meyers, chairman and CEO of Equinix, poses in his office in Redwood City, California, December 18, 2018.
Nhat V. Meyer | Bay Digital First Media | Mercury News via Getty Images
Hindenburg Research on Wednesday he took aim at , an $80 billion data center provider, and accused the company’s management of selling an “AI pipe dream” to shareholders while manipulating key metrics to extend the appearance of profitability.
Hindenburg stated that it took a brief position on Equinix, meaning it was betting that the real estate investment trust (REIT)’s shares would fall.
Equinix shares fell as much as 7% in pre-market trading before paring losses at Wednesday’s open to about 3%.
According to Equinix’s, the company’s customers include the cloud divisions of Amazon, Google and Microsoft website.
“We are investigating these claims and will respond in due course,” an Equinix spokesperson told CNBC.
The short-seller said Equinix reported sustaining expenses – a serious cost center for REITs – as growth expenses, which gave the impression that “the costs of maintaining the company’s revenue base are lower than they actually are.”
Former Equinix employees and executives allegedly told Hindenburg that pressure to misclassify capital expenditures as growth relatively than maintenance got here “from top management.”
Hindenburg said “questionable” accounting allowed Equinix to extend its adjusted funds from operations, a measure the company also used to find out executive stock grants.
Equinix was founded in 1998 and have become a REIT in 2015. As of December 2023, it employed over 13,000 employees. regulatory filings.
In its newer earnings reports, the company touted its “key” role “in an AI-powered world.”
Hindenburg took short positions on other big names including Nikola, Icahn Enterprises and Gautam Adani’s conglomerate.
