Why Is GDS Holdings Stock Trading Lower Tuesday?

GDS Holdings Ltd GDS reported a fourth-quarter fiscal 2023 net revenue growth of 6.3% Y/Y to $360.1 million, beating the consensus of $357.6 million.

Loss per ADS of $(0.01) beat the consensus loss of $(0.33). The stock price slid after the results.

Service revenue of the leading developer and operator of high-performance data centers in China increased 6.3% Y/Y to $360.1 million.

The total area committed and pre-committed by customers rose 6.4% Y/Y to 670,975 square meters (sqm) as of December 31, 2023.

Area in service rose 11.0% Y/Y to 572,555 sqm, with the commitment rate for area in service standing at 92.8% (vs. 95.5%) as of December 31, 2023.

Adjusted EBITDA rose 5.7% Y/Y to $159.5 million. Adjusted EBITDA margin declined to 44.3% from 44.6% a year ago due to an increase in utility cost.

As of December 31, 2023, the cash balance was $1.09 billion.

FY24 Outlook: GDS expects its total revenues of CNY11.34 billion – CNY11.76 billion, implying a Y/Y increase of between 13.9% – 18.1% vs CNY11.10 billion consensus; and its adjusted EBITDA of CNY4.95 billion – CNY5.15 billion, implying a Y/Y increase of between 7.0% – 11.4%. In addition, it expects capex of CNY6.50 billion.

GDS also disclosed a $587 million equity raise for its international business, DigitalLand Holdings Limited.

GDS tapped the company COO Jamie Khoo as CEO of DigitalLand Holdings. Mr. Kejing Zhang, SVP, Sales, Ms. Yan Liang, SVP, Operational Excellence, and certain other personnel will take over the responsibilities of the company COO.

The stock has lost over 55% in the last 12 months. Investors can gain exposure to the stock via Global X Data Center REITs & Digital Infrastructure ETF VPN and Pacer Data & Infrastructure Real Estate ETF SRVR.

Price Action: GDS shares traded lower by 23.80% at $6.37 on the last check Tuesday.