QS Research · Michael Burry's Scion Capital analyst template · 2006
EQUINIX INC (EQIX)
As of 2026-11-11 · 12/15 boxes filled from SEC filings and market data
Report price $1,050.00 (close 2026-11-10)
Conclusion: SHORT
Conviction medium · base case -34% · downside -48% · upside +12%
The market is paying 63.1x GAAP earnings (51.4x on tax-normalized operating earnings) and 12.48x EV/Sales, the highest in a peer table whose median P/E is 41.6x, for a REIT earning a TTM ROIC of 5.4% against a 6.2% WACC, generating -$646M of free cash flow after $4.82B of capex (108% of EBITDA) and carrying $21.62B of net debt at 4.9x EBITDA with EBIT/interest of only 3.7x. Nothing operational is broken: Q3 2026 revenue rose 11% to $2.571B, adjusted EBITDA 15% to $1.321B and record annualized bookings 35% to $533M, guidance was raised a third time and backlog is $15.90B (1.58x TTM revenue). But three cases on the same TTM post-deal earnings base of $1.65B (N15) frame the price: at the peer-median 41.6x the stock is worth $692 (-34%), at today's 63.1x on 12% higher earnings (guided FY2026 revenue growth, N/S31) it is worth about $1,178 (+12%), and on a 25% earnings cut at the compressed 52.35x midpoint it is $654 (-38%); even on the higher tax-normalized operating earnings of $2.02B (N38) the 41.6x anchor gives only about $849, still -19%. Q3's GAAP net income of $489M is flattered by a $54M non-recurring atNorth JV fee, so the 31% net income growth is not the run rate, and $1.55B of equity stakes (15% of TTM revenue) flags a vendor-financing question about how much of the growth the company funds itself. This is a short: the business is good, the price already discounts the guidance, and the independent base sits 34% below the quote.
Key numbers
- Share price: $1,050.00
- Market cap: $103.94B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $10.06B
- EV / EBITDA (TTM): 28.3x
- P/E (TTM): 63.1x
- FCF yield: -0.6%
- Price / book: 7.15x
- Earnings-quality flags (TTM): none flagged
- P/E, operating (tax-normalized) (TTM): 51.4x
- Revenue growth (latest fiscal year): +5.4%
- ROIC (TTM): 5.4%
- WACC: 6.2%
- Economic profit spread: -0.8 pts
The 15 boxes
- ✓ 1. Long-form business notes
Equinix is a REIT that sells space, power and private interconnection inside network-neutral data centers — 280 data centers in 77 markets and 36 countries at FY2025, up from more than 225 IBX and xScale facilities and close to 10,000 customers described in the FY2020 10-K, a step-up widened by the 2020 Bell, Axtel and Packet deals. Revenue is contracted monthly recurring revenue billed on consumed space/power (colocation) and on outbound connections (interconnection), with xScale hyperscale halls run through joint ventures. Post-deal economics: FY2025 revenue $9.22B, operating income $1.85B, operating cash flow $3.91B against $4.31B of capex, and TTM to Sep 30 2026 revenue $10.06B, operating income $2.26B, net income $1.65B and operating cash flow $4.17B. The model is capital-hungry — capex has run at or above operating cash flow in every year shown — which is the key thing to test against the earnings base.
- ✓ 2. Competitive advantage
Equinix's stated moat is its interconnection ecosystem and global footprint: a 36-country platform, over 10,500 customers as of 2025-12-31, no customer at 10% or more of FY2025 revenue, and management's own claim that the ecosystem network effect is "a significant source of competitive advantage." The record supports pricing scale rather than pure franchise: operating income rose from $1.05B (FY2020) to $1.85B (FY2025) and $2.26B on the TTM to 2026-09-30, on revenue of $6.00B to $9.22B to $10.06B. But it is a capital-hungry model — FY2025 capex of $4.31B exceeded operating cash flow of $3.91B, D&A was $2.05B, and diluted shares rose from 88.41M (FY2020) to 99.13M (TTM to 2026-09-30). Competition is broad and fragmented, with hyperscalers owning their own data centers and new AI-driven entrants explicitly flagged as a share-loss risk in the FY2025 10-K.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended Sep 30, 2026) was a clean double-digit growth quarter: revenue $2.571B (+11%; +12% on the release's normalized and constant currency basis), adjusted EBITDA $1.321B (+15%), record annualized gross bookings $533M (+35%), and FY2026 guidance was raised for the third consecutive quarter (revenue $10.325-10.365B, adjusted EBITDA $5.290-5.330B at ~51% margin). Reported net income of $489M is flattered by a $54M non-recurring atNorth joint venture fee, so AFFO per share growth is +18% as reported but +12% excluding that fee. Costs rose roughly in line with revenue (Q3 cost of revenues +10%), with the pressure points being power/utilities and depreciation, partly offset by lower Americas G&A. Interest expense and the tax rate both rose, the latter against a 2025 valuation-allowance release.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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