Why Equinix Stock Sagged on Thursday

Data center specialist Equinix's (NASDAQ: EQIX) stock had a forgettable session on Thursday. The shares ended the day more than 1% lower, on the back of quarterly earnings that didn't entirely meet analyst expectations. Contrasting the stock's decline was the path of the S&P 500 (SNPINDEX: ^GSPC), which rose at essentially the same percentage rate.

A very wide miss

Equinix released its fourth-quarter and full-year 2024 figures just after market close Wednesday. These showed that the company's revenue rose by 7% year over year to $2.26 billion.

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Going in quite the opposite direction was the bottom line; according to generally accepted accounting principles (GAAP) standards, Equinix flipped to a loss of $14 million ($0.14 per share) from the year-ago profit of $227 million.

With those numbers, Equinix came in just under the average analyst estimate for revenue, which was $2.28 billion. However, it missed rather badly on the bottom line, as those pundits were collectively modeling a profit of $2.75 per share for the period.

The company's financials were particularly impacted by $233 million in impairment charges, which drove its total operating expenses 9% higher to $962 million. Its adjusted funds from operations (AFFO) -- considered a truer measure of profitability for real estate investment trusts (REITs) -- actually increased, rising 11% to $770 million.

Unforgiving investors

Equinix proffered guidance for its current (first) quarter and the entirety of 2025. For the latter period, it forecast $9.03 billion to $9.13 billion in revenue, and just under $3.61 billion to nearly $3.69 billion in AFFO. However, like the trailing quarter, the revenue projection came in under the consensus analyst estimate, in this case almost $9.45 billion.

In a way, Equinix is lucky it escaped a more aggressive sell-off. Investors aren't all that forgiving for misses on both trailing metrics and guidance. Perhaps they should be in this case, as Equinix is still managing to post healthy increases in revenue and, especially, AFFO.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Equinix. The Motley Fool has a disclosure policy.