Equinix (EQIX) Falls After Disclosing Internal Investigation and DOJ Subpoena - Hagens Berman

SAN FRANCISCO, April 01, 2024 (GLOBE NEWSWIRE) -- Hagens Berman urges Equinix, Inc. (NASDAQ: EQIX) investors who suffered substantial losses to submit your losses now.

Visit: www.hbsslaw.com/investor-fraud/EQIX
Contact An Attorney Now: [email protected]
844-916-0895

Equinix, Inc. (NASDAQ: EQIX) Investigation:

On Mar. 25, 2024, Equinix disclosed announced that the Audit Committee of the company’s Board of Directors has commenced an independent investigation to review the matters referenced in a recent short seller report. Equinix further disclosed that after the release of the report, the company received a subpoena from the U.S. Attorney’s Office for the Northern District of California.

The short seller report in question was issued by Hindenburg Research on Mar. 20, 2024, alleging that Equinix’s senior management was manipulating key financial metrics to boost the appearance of profitability and trigger executive stock grants.

Hindenburg’s report, entitled “Equinix Exposed: Major Accounting Manipulation, Core Business Decay And Selling An AI Pipedream As Insiders Cashed Out Hundreds of Millions,” is based in part on interviews with 37 former Equinix employees and a forensic review of the company’s financial statements.

Significantly, Hindenburg’s forensic review concludes that:

(1) Equinix inflates its adjusted funds from operations (“AFFO”), the key profitability metric for REITs, by at least 22% during 2023 alone;

(2) “[a] key accounting trick to boost AFFO is to misclassify ‘maintenance CapEx’ as ‘growth CapEx,’ giving the appearance that the company’s cost to maintain its revenue base is lower than it actually is, making the company appear more profitable[;]”

(3) “[w]hen Equinix transitioned to become a REIT in 2015, it began using AFFO as a key metric in determining executive bonuses[;]”

(4) “[d]uring our investigation, former employees and executives provided an array of examples of obvious maintenance CapEx being classified as growth CapEx in order to boost reported AFFO[]” and “[t]his manipulative practice stems from top management[;]” and

(5) “[w]e estimate that Equinix’s manipulation of maintenance CapEx has resulted in a cumulative $3 billion boost to AFFO since its 2015 conversion to REIT status.”

Hindenburg observes that Equinix’s questionable AFFO accounting has substantially contributed to $295.8 million in stock award grants to top executives. Hindenburg further contends that “Equinix positions itself as a way to play AI, but former executives confirmed the rise of AI and machine learning workloads will strain power capacity” because, according to a former executive “‘every single site in the estate is oversold by 25%.’”

Lastly, Hindenburg notes “[n]one of these issues seem lost on management and insiders, who have been awarded compensation based on manipulated AFFO metrics and have cashed out $476 million since the company’s conversion to REIT status, including over $100 million since 2023.”

In response to these events, the price of Equinix shares has fallen $52.06, or down over 6%, since Mar. 19, 2024.

“We’re investigating whether Equinix may have inflated key financial metrics to appear more profitable,” said Reed Kathrein, the Hagens Berman partner leading the investigation.

If you invested in Equinix and have substantial losses, or have knowledge that may assist the firm’s investigation, submit your losses now.

If you’d like more information and answers to frequently asked questions about the Equinix investigation, read more.

Whistleblowers: Persons with non-public information regarding Equinix should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email [email protected].

About Hagens Berman
Hagens Berman is a global plaintiffs’ rights complex litigation law firm focusing on corporate accountability through class-action law. The firm is home to a robust securities litigation practice and represents investors as well as whistleblowers, workers, consumers and others in cases achieving real results for those harmed by corporate negligence and fraud. More about the firm and its successes can be found at hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw. 

Attorney advertising.
Past results do not guarantee future outcomes.
Services may be performed by attorneys in any of our offices. 

Contact:
Reed Kathrein, 844-916-0895