Why GDS Holdings Stock Is Plummeting Today

Motley Fool03-27

GDS' Q4 results were mixed, but that's not the main reason the stock is crashing today. Investors were hoping that the company would sell off the businesses it operates outside of China. ...

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The Chinese data center company's share price was down 26.5% as of 2 p.m. ET, according to data from S&P Global Market Intelligence.GDS published its fourth-quarter earnings results before the market opened this morning, and there's a lot that investors aren't happy about. In addition to mixed sales and earnings performance, the company announced a new leadership appointment and fundraising move that indicate it will not sell its international segment.GDS serves up mixed Q4 resultsIn the fourth quarter, revenue increased 6.3% year over year to reach roughly 2.56 billion Chinese yuan -- or roughly $360.1 million. While the company's growth rate ticked up, the business still posted a net loss of roughly 3.16 billion yuan -- or roughly $445.7 million. For comparison, the business recorded a net loss of 177.9 million yuan in the prior-year quarter, which works out to roughly $24.9 million based on today's exchange rate. On the other hand, the company's non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 5.7% year over year to roughly 1.13 billion yuan -- or roughly $159.5 million. While the company's adjusted EBITDA margin dipped from 44.6% in the prior-year period to 44.3%, the sales increase was still enough to power mid-single-digit EBITDA growth.Investors want GDS to sell its businesses outside of ChinaEarlier this month, GDS stock surged on news that the company was considering selling off its businesses that operate outside of China. With the company announcing today that it is appointing a new CEO for its international business and raising funding through a stock sale, selling off its non-Chinese units looks much less likely right now.Current chief operating officer Jamie Koo will be stepping down from that role to become the CEO of DigitalLand -- the holding company for GDS' businesses outside of China. With GDS also announcing that it would raise $587 million through equity sales in order to help finance the operations of its international businesses, there seems to be little chance that the unit will be sold to an outside party anytime soon.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2422064029"}