NextDC Shares Plunge 40% After Slashing Earnings Forecast Due to Power Delays

NextDC Revises Financial Outlook

NextDC, an Australian data center operator, announced a significant reduction in its financial guidance for fiscal year 2027. The company now expects revenue between A$475 million and A$500 million, down from an earlier forecast of A$615 million to A$640 million. Underlying EBITDA projections were also lowered to A$245 million to A$265 million, from the previous A$385 million to A$410 million.

Power Supply Delays at Melbourne Facility

The primary reason cited for the revised forecast is delays in power supply to its M3 Melbourne data center. Infrastructure upgrades at the facility have been suspended due to opposition from the local community. Electricity distributor Jemena stated it does not anticipate resuming work before February 2027, citing safety concerns, restricted site access, and lack of local council consent pending further community consultation.

Market Reaction and Analyst Commentary

Following the announcement, NextDC's shares plunged by 39.5% on Wednesday. This decline extends a seven-week losing streak for the company's stock. Citi analysts noted that these power delays could impact earnings beyond fiscal 2027, pointing to extended timelines for transformer upgrades and M3 expansion approvals.

Broader Industry Context and Government Response

Australia is experiencing increasing concerns regarding the impact of data center developments on local communities. Treasurer Jim Chalmers indicated that the government is developing national standards for investment in data centers and AI infrastructure. He emphasized that such investments must align with national interests, and the government is finalizing national investment standards to address these concerns. This situation reflects a global trend of growing community pushback against data center projects due to their local and environmental impacts.