Charles J. Myers, president and CEO of Equinix, poses in his office in Redwood City, California, December 18, 2018.

Nate W. Meyer | Bay Digital First Media | The Mercury News via Getty Images

Wednesday’s Hindenburg Study took aim at Equinixan $80 billion data center provider, and accused the company’s management of selling shareholders an “artificial dream” while manipulating key metrics to increase the appearance of profitability.

Hindenburg said he has taken a short position against Equinix, meaning he is betting that shares of the real estate investment trust, or REIT, will fall.

Equinix shares fell as much as 7% in premarket trading before paring losses at Wednesday’s open to about 3%.

The company’s customers include the cloud divisions of Amazon, Google and Microsoft, according to Equinix’s website.

“We are investigating the allegations and will respond in a timely manner,” an Equinix spokesperson told CNBC.

The short seller said Equinix is ​​reporting maintenance costs — a major cost center for REITs — as growth costs, making it appear “the company’s costs to maintain its revenue base are lower than they really are.”

Former Equinix employees and executives are said to have told Hindenburg that the pressure to misclassify capital expenditures as growth rather than maintenance came “from upper management.”

Hindenburg said the “questionable” accounting allowed Equinix to increase its adjusted funds from operations, a metric the company also uses to determine executive stock grants.

Equinix was founded in 1998 and became a REIT in 2015. It has more than 13,000 employees as of December 2023, according to regulatory submission.

In its more recent earnings reports, the company touted its “crucial” role “in a world driven by AI.”

Hindenburg took short positions against other big names including Nikola, Icahn Enterprises and Gautam Adani’s conglomerate.