Hindenburg Accuses Equinix of Accounting Manipulation and AI Hype

Hindenburg Research, the short-selling activist firm founded by Nathan Anderson, has turned its attention to Equinix, a data centre giant valued at nearly $80 billion. In a new report, Hindenburg accuses the company of manipulating its accounting practices, particularly in how it reports its profitability metrics, and claims that Equinix is selling an "AI pipe dream."

Hindenburg, which holds a short position in Equinix, alleges that the company overstated its adjusted funds from operations (AFFO) by at least 22% in 2023. The firm also argues that the company’s valuation is inflated, suggesting that investors are overestimating Equinix's prospects based on the excitement surrounding artificial intelligence (AI).

Following the release of the report, Equinix’s stock dropped by 3.5%, despite a 4.9% gain earlier this year up until Tuesday’s close. Hindenburg, known for targeting companies like financial software firm Temenos and Indian conglomerate Adani Group, claims that even when Equinix’s financials are taken at face value, the company’s stock is still overvalued.

While Equinix has attributed its growth to the booming AI sector, Hindenburg contends that the AI hype could actually pose a risk to the company's future performance. The report suggests that AI-related demand could strain Equinix’s power-constrained facilities, undermining its long-term prospects. Hindenburg’s critical report raises serious concerns over whether Equinix is truly benefiting from AI growth or simply capitalising on market euphoria.