NextDC shares plunge following Melbourne data centre power delays

NextDC, an ASX-listed provider of digital infrastructure, saw its stock price drop 40 per cent on Wednesday following updates regarding power delays at a new data centre in Melbourne. The company provides facilities essential for cloud technology and artificial intelligence.

The sell-off has triggered scrutiny of the company’s financial health and capital-intensive business model. Analysts have significantly lowered price forecasts, with the mean forecast dropping from $20.54 to $12.24.

Financial concerns include a projected 35 per cent reduction in earnings, which may pressure cash flows and impact the company’s ability to meet banking covenants. These covenants include a 60 per cent gearing ratio limit and requirements regarding interest coverage. Analysts at Jefferies warned that if power issues persist, the company could potentially breach its interest coverage ratio by 2028.