Equinix's Board of Directors has launched an internal investigation following the recent short seller report accusing the colo provider of "major accounting manipulations."

– Equinix

Shortly after Hindenburg Research published its report which accused Equinix of misclassifying "maintenance CapEx" as "growth CapEx," which in turn makes the company's maintenance costs look lower and Equinix seem more profitable, the company received a subpoena from the US Attorney's Office for the Northern District of California.

In a release, the company said: "Receipt of these types of inquiries is not unusual in these circumstances, and Equinix intends to fully cooperate in this matter."

Equinix went on to add: "We take seriously our obligations of transparency and accuracy in our financial reporting. We believe we have earned the trust of our investors - and all our stakeholders - by reliably delivering on our commitments with integrity and meeting the requirements of our customers, as we have demonstrated throughout our 25-year history."

The accusations levied by Hindenburg Research, which has since taken a short position in shares of Equinix, suggests that in total the alleged manipulation of CapEx has resulted in a $3 billion boost to AFFO since 2015, and a $295.8 million in stock award grants to top executives.

The report further suggests that Equinix has been overselling power capacity in the hope that customers won't use all the power they have contracted for.

The Hindenburg report has faced some criticism, with brokerage TD Cowen describing it as a "rehashing of a short thesis published in 2022" which was focused on Digital Realty. The brokerage added: "The comments on overselling power capacity are incremental, but (it) is a broader industry practice."

Equinix said in its release that the company will not comment further on the matter "until appropriate to do so."

Following these revelations, Equinix's stock dipped around seven percent and was down less than one percent following the announced audit.