Equinix has completed an internal audit and refuted claims made over its accounting practices by a short seller.

In March 2024, short-seller Hindenburg Research accused data center REIT Equinix of "major accounting manipulations," claiming the company overstated its adjusted funds from operations (AFFO), a key profitability metric for REITs, by at least 22 percent in 2023 alone. Equinix subsequently launched an investigation into the claims.

In its quarterly earnings report this week, the company refuted the claims in the report and said an audit found no issues.

“Today, Equinix announced that the audit committee of the company's board of directors conducted and has substantially completed a previously announced independent investigation, with the assistance of independent third-party professional advisors,” the company said this week.

“Based on the findings of the independent investigation, the audit committee has concluded that Equinix's financial reporting has been accurate, and that the application of its accounting practices has resulted in an appropriate representation of its operating performance.”

Equinix said the audit committee did not identify any accounting inconsistencies or errors requiring an adjustment to, or restatement of, previously issued financial statements or non-GAAP measures.

The company also noted that shortly after the release of the short seller report, Equinix received subpoenas from the US Attorney's Office for the Northern District of California and the Securities and Exchange Commission, which are ongoing.

“The company is cooperating fully with both subpoenas and does not expect to comment further on such matters until appropriate to do so,” Equinix said.

Hindenburg’s report claims that, when Equinix became a REIT in 2015, it began using AFFO as a key metric to determine executive bonuses, and that same year reported a sudden 47 percent drop in maintenance CapEx, leading to a 19 percent increase for the AFFO.

Hindenburg claims that the company has been misclassifying "maintenance CapEx" as "growth CapEx," which in turn makes the company's maintenance costs look lower and Equinix seem more profitable. After this research, Hindenburg said it had taken a short position in shares of Equinix.

The Hindenburg report has faced some criticism, with brokerage TD Cowen describing it as a "rehashing of a short thesis published in 2022" which was focused on Digital Realty.

At the time of writing, Equinix stock is currently trading at $772.43 a share, down from a high of $913.66 in early March in the weeks prior to the report coming out (Equinix’s stock was around $800 upon the report’s release).