(Reuters) -Hindenburg Research disclosed a short position in Equinix on Wednesday, saying the data center operator trades at elevated levels, has overstated a key profitability metric and faces strong competition from large cloud firms, including Amazon.com. Equinix’s shares fell 6% in premarket trading, while shares of its rival Digital Realty dropped 4%.
The short seller, known for its reports against companies including India’s Adani Group, said Equinix used an accounting trick to boost its adjusted funds from operations (AFFO), to misclassify capital expenditure for maintenance as spending for growth to make the company look more profitable.
The real estate investment trust did not immediately respond to a Reuters request for comment.
Manipulation of maintenance capital expenditure has resulted in a $3-billion boost to the firm’s AFFO since 2015, the Hindenburg Research report said.
Equinix has more than 10,000 customers, including over 260 Fortune 500 companies.
(Reporting by Akash Sriram in Bengaluru; Editing by Shilpi Majumdar and Pooja Desai)
Comments