NextDC chief executive Craig Scroggie has described the company's situation as a disappointing setback, telling investors on a conference call that the group would pause further land purchases and not rule out sales. The company slashed its profit forecasts after energy distributor Jemena suspended a power upgrade following community and stakeholder opposition. The local council has withheld consent until more community consultation takes place.
Residents in the quiet suburban streets of Yarraville and West Footscray expressed frustration. Local Milco Bogoevski said the planned upgrade would affect his street for decades. Another resident, Jacqui Glover, described the situation as a constant battle.
Analysts have suggested the sell-off may be overdone. Morgans analyst Nick Harris described the low price as unwarranted if the issues are short-term, but acknowledged that investors are concerned about further delays and knock-on effects given NextDC's funding load. Morningstar's Dan Baker said community concerns could increase development costs and force data centres further from built-up areas.
Investor sentiment towards data centre stocks has been mixed. UniSuper's chief investment officer John Pearce told Bloomberg he is not keen on pure infrastructure players, drawing a parallel with the internet boom where the winners were companies like Netflix rather than the infrastructure owners.
Scroggie, known for his gym routine and strict uniform of black jeans and shirts, has been a prominent figure in the AI infrastructure boom. NextDC's market value had soared above $11 billion earlier this year before the sudden reversal. The company is now considering whether it can invoke force majeure clauses on contracts with AI-hungry customers whose computing power will not be delivered on time. Meanwhile, Shine Lawyers is investigating whether NextDC issued financial guidance without reasonable grounds or failed to inform investors of material impacts.