Australians also don’t like data centers: NextDC shares fall 42% after community opposition stalls a grid upgrade

Australian data center firm NextDC saw its shares plummet 42% after investor concerns over community opposition and delayed grid upgrades led to a major downgrade in revenue and earnings predictions. The Brisbane-based company now expects to generate between $333 million and $350 million, a drastic cut from its previous forecast of $615 million to $640 million. Earnings before interest, tax, depreciation, and amortization (EBITDA) were also slashed to between $172 million and $186 million.

The main culprit behind NextDC's woes is the M3 Melbourne data center, whose grid supply is being held up by Jemena, the electricity provider. A segment of Jemena's network works was suspended two months ago due to local community opposition and a lack of council consent, with no restart date in sight. NextDC CEO Craig Scroggie blamed the setback on community and stakeholder opposition, as well as the absence of local council approval pending further consultation.

In a bid to cut costs, NextDC also reduced its capital expenditure by $527 million and halted land acquisitions and new development projects. This move comes as data center and AI infrastructure companies face a tough period, with several recent setbacks. Firmus, another Australian data center operator, canceled its planned IPO in October, while AirTrunk, a Blackstone-owned data center operator, postponed a Singapore listing.

In the U.S., neocloud CoreWeave saw its bonds drop to below 80 cents on the dollar, signaling financial strain. Tesla CEO Elon Musk expressed concern by posting "yikes" on social media. South Korean cloud provider Elice Group's shares also fell by 32% on their first day of trading. The situation may worsen further, as Singapore-based DayOne Data Centers is contemplating delaying or reducing the size of its upcoming U.S. IPO.