Data Center REITs Ignore Palihapitiya’s Chip, Buy This Dip NASDAQ:EQIX

On April 29, Gilead announced that it was “aware of positive data” about remdesivir’s performance in a federal trial. A few hours later, from the Oval Office, Dr. Fauci said the drug could modestly speed recovery in patients. Although he said it was not a “knockout,” Dr. Fauci — his agency ran that trial, too — said the drug could become the standard of care.

Hours after announcing positive results from a small trial of its coronavirus vaccine, Moderna Therapeutics unveiled a stock offering that sought to raise $1.3 billion. The majority of companies going public in 2021 chose tokenexus crypto exchange review the IPO route, but some of the biggest valuations resulted from direct listings. Despite its many tumultuous turns, last year was a productive year for global markets, and companies going public in 2021 benefited.

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I relentlessly hunt for diamonds in the rough and rising stars in addition to closely following data centers, covering REIT blue-chips and breaking news. Please consider following me as a Seeking Alpha author if you would like to be notified when my future articles are published. In Q4 2016, there was a dearth of new supply (a lack of large-scale data halls) in Northern Virginia and Dallas, two of the largest US data center markets. Notably, this is not the case this year, as there are massive powered shells available for lease and custom build-out across both key markets. Jevons paradox, popularized by a 2010 New Yorker magazine article The Efficiency Dilemma, helps in part to explain the insatiable demand for additional data center space.

Asked about criticism that sites like medRxiv encourage the rash publication of bad science, Dr. Krumholz said these conversations were healthy and noted that articles in peer-reviewed journals could also be flawed. Submissions go through basic vetting to ensure the research is legitimate. The information would likely have leaked out — especially given that, two weeks earlier, information from another remdesivir trial had been disclosed to the news site STAT, sending Gilead’s stock up.

Two spots are taken up by Aaj Tak and Globo, which are large media publications in India and Brazil, respectively. This visualization, using data from SimilarWeb, takes a look at the 50 websites that currently sit at the top of the ranking. However, the company has a low AFFO payout ratio of just ~50% and reinvests the other half of its free cash flow into accretive organic growth, underwritten at 30%-plus yields for each phase at stabilized occupancy.

«Without an effective vaccine, current EPS consensus expectations would be what is bond etf and how it works on the optimistic side. But with one, they may actually come to pass.»

On the upper end of the ranking though, a handful of websites receive the lion’s share of internet traffic. Payment processing firm Stripe was setting up to be the year’s biggest IPO with an estimated valuation of $95 billion, but got delayed. Likewise, online grocery delivery platform InstaCart, which saw a big upswing in traction due to the pandemic, has been looking to go public at a valuation of at least $39 billion. The AFFO growth rate and dividend growth rate are what attract long-term investors to Equinix. Based upon 2018e AFFO per share of $21.45, Equinix is currently trading at just over a 20x AFFO multiple. When you compare that with a high teens AFFO per share growth rate and double-digit increases in the dividend, it makes Equinix an attractive technology REIT to consider owning.

Tale Of The Tape – Shares Weaken

And the stock sale stirred concerns about whether the company had sought to jack up the price of its stock offering with the news. From much-hyped tech initial public offerings to food and healthcare services, many companies with already large followings have gone public this year. Some were supposed to go public in 2020 but got delayed due to the pandemic, and others saw the opportunity to take advantage of a strong current market. In the eight trading days since Palihapitiya’s bearish views were widely shared in the media, publicly traded data center REIT shares have been under consistent selling pressure. Here is his narrative in a nutshell, «Since server chips are getting smaller and more powerful than ever, companies in the future will not need anywhere near the amount of data center space they need today.»

• Asked about criticism that sites like medRxiv encourage the rash publication of bad science, Dr. Krumholz said these conversations were healthy and noted that articles in peer-reviewed journals could also be flawed.
• All FTX users who trade tokenized stocks may also have to become customers of CM-Equity, and pass through CM-Equity’s KYC and compliance.
• Despite its many tumultuous turns, last year was a productive year for global markets, and companies going public in 2021 benefited.
• Furthermore, all trading activity may be monitored for compliance by CM-Equity.
• A vaccine «turns what could have been a prolonged crisis into something closer to a natural disaster ,» TS Lombard analysts Steven Blitz and Andrea Cicione wrote in a note.

Moderna is not the only company that has failed to release detailed scientific data. Little has been known about another closely watched product, remdesivir, an experimental treatment for Covid-19 developed by the drugmaker Gilead. The decline of the stock and bond markets this year has been painful, and it remains difficult to predict what is in store for the future. Drug companies accustomed to releasing early data to attract investors and satisfy regulators suddenly find themselves accused of revealing too much, or not enough, by a new, broader audience. Journalists may be scolded for hyping early findings, while those who ignore sketchy data may be blamed for missing the news. Other websites in the top 50 ranking include social media giants Facebook, Instagram, and TikTok.

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A convincing argument can be made that faster chips will actually accelerate the demand for data center space, not the other way around. Moderna said Monday that its coronavirus vaccine was more than 94% effective during a late-stage trial. The promising announcement makes the Massachusetts-based biotech firm the second drugmaker to say it has a potentially effective vaccine.

The analyst consensus price objective for EQIX shares of $495.26 represents a 13.5% upside from the previous close of $436.47 per share. However, if you are looking for current income, Equinix would not be the ticket. Its shares rarely yield over 2%, and currently offer just a 1.8% annual yield. A similar pattern occurred in 2016, when data center REITs ran up 50% during the first half of the year, peaked in July, and then steadily sold off as the autumn leaves turned color and then fell through mid-November.

Traders were also excited on Monday after Moderna said its vaccine remains stable at 36 to 46 degrees Fahrenheit, the temperature of a standard home or medical refrigerator, for up to 30 days. By comparison, Pfizer’s vaccine requires a storage temperature of minus 94 degrees Fahrenheit. But now, many papers are being published on preprint servers, where scientists are posting research before it is accepted by a journal.

In particular, TikTok has seen a surge in popularity in recent years and is now one of the most popular social media platforms in the world. Topping the list of most-visited websites in the world is, of course, Google. With over 3.5 billion searches per day, Google has cemented its position as the go-to source for information on the internet. The company also owns YouTube, the second-most popular website in the world. Together, Google and YouTube have more traffic than the next 48 websites combined.

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The site medRxiv, which was founded last June, had 10 million views in April and has posted nearly 3,100 papers related to Covid-19 since January. Dr. Fauci said he and his research team decided to report some results when the study was stopped after an independent safety board found that the treated patients were recovering faster than those receiving placebos. Its technology, based on genetic material called messenger RNA or mRNA, is considered highly promising. Still, concerns arise routinely about the quality of rapidly posted data and the motivations behind announcements. Nearly all are trying to compress the timetable for developing vaccines that normally takes years, sometimes decades, into a year or so — and still ensure that the vaccines will be safe and effective. In this visualization, we rank the top 50 websites that receive the most internet traffic, from Google to CNN.

Technology

News outlets are rushing to stay on top of new findings, and to feed a public hungry for any advances in potential treatments or vaccine candidates that hold promise against the highly infectious virus. Some news organizations would prefer to maintain traditional practice and ignore early results of medical studies, waiting for peer-reviewed data but they are also competing to report on the latest studies. Scientists who take the traditional time to gather and analyze their data for publication in mainstream journals are criticized for sitting on lifesaving information.

Articles are posted on so-called preprint websites of studies that have not been peer-reviewed by experts, unlike articles in mainstream medical and science journals. Clinicaltrials.gov, which lists medical studies, showed that 1,673 were underway for Covid-19, the disease caused by the coronavirus, as of May 23. The company had not released any more data, so scientists could not evaluate its claim. The government agency leading the trial, the National Institute of Allergy and Infectious Diseases, had made no comment on the results.

In the comment section of last week’s Seeking Alpha article, I was struck by the belief that all things in technology will always become smaller, faster and cheaper – and this was somehow a bad thing for data center landlords. Palihapitiya was widely quoted regarding his bearish views on investing in data centers – largely based upon the increasing power of new chips under development by Alphabet/Google. Similar trial results last week from Pfizer and BioNTech drove investors into underperforming names dependent on a vaccine reopening the economy. The companies said at the time that their candidate was more than 90% effective in preventing Covid-19 among participants. U.S. stocks rose on Monday after preliminary coronavirus vaccine data from Moderna further lifted expectations of a strong economic recovery.

The exponential growth of global data has been, and continues to be, a secular tailwind for data center landlords. This growth has been supported by faster chips, optical networking advances, fiber infrastructure, and submarine cable deployments, which support the increase in global IP traffic and enable hyper-scale cloud deployments.» Nine hours after its initial news release — and after the markets closed — the company announced a stock offering with the aim of raising more than $1 billion to help bankroll vaccine development. That offering had not been mentioned in Moderna’s briefings of investors and journalists that morning, and the company chairman later said it was decided on only that afternoon. Addressing the long-term IT needs for public cloud, enterprise and software firms by developing massive data centers can be risky. Especially when buildings are spec and when the lease-up of available phases does not necessarily fall neatly into financial reporting periods.

Subsequently a minimal post-acquisition guidance cut from Equinix in October 2010, finally gave bears a reason to pounce on the stock and sector sending names like EQIX/DLR/COR down ~20% over the next 1-2 months. This has been followed by ~7 years of mostly consistent growth and share price appreciation for the sector, with the occasional sector pullbacks providing buying opportunities. A few days prior to the Developing Alpha conference in mid-September, most data center REITs had been trading at or near all-time highs. The iShares Russell 1000 Value exchange-traded fund rallied 5.7% last week while its growth counterpart, the iShares Russell 1000 Growth ETF slid 1.2%. Value continued to outperform on Monday, with IWD gaining 1.9% and IWF advancing just 0.5%. Stocks that would benefit from the economy reopening led the way higher.

The good news is history has shown that Moore’s Law is a friend, allowing operators to sell more power per square foot to customers as they upgrade with more and more powerful processors. More than 11 million Covid-19 infections have been confirmed in the U.S., according to data from Johns Hopkins University. Data from the COVID Tracking Project also showed that a record of more than 69,000 people in the U.S. are hospitalized with the coronavirus.

Commercially available quantum computers and DNA storage are not going to change the demand for data center space anytime soon. Meanwhile, the exponential growth in global data, public cloud services, network and wireless traffic, streaming video, combined with the relentless proliferation of mobile devices and IoT sensors, is accelerating, not slowing. Lastly, we understand these servers take a significant amount of power which makes them even more dependent on the services third party data centers provide, not less. This is even a better argument for data centers to benefit from this technology as the higher power draw will require very specific facilities and mechanical designs that CIO’s will find challenging to provide at scale if at all.» Investors who are not familiar with the data center industry tend to forget that data centers owned by third-party landlords can sell power and connectivity in addition to square footage. The ability to directly connect securely and with low latency to telecom and cloud networks, hyper-scale cloud and software firms, and industry ecosystems (customers, vendors, supply-chain partners, etc.) all help to drive demand.

Bank stocks such as Citigroup and Wells Fargo gained more than 3% each and JPMorgan Chase advanced 2.8%. CM-Equity is fully regulated in Germany, and is a licensed financial institution permitted to offer such products. All FTX users who trade tokenized stocks may also have to become customers of CM-Equity, and pass through CM-Equity’s KYC and compliance. Furthermore, all trading activity may be monitored for compliance by CM-Equity.

Dan Russo, chief market strategist at Chaikin Analytics, thinks the market can weather this latest spike in coronavirus cases, however. «By and large, investors are taking a glass-half-full view of the markets right now,» what are trend and counter-trend trading he added. «Supporting this rotation is the prospect for additional stimulus, continued improvement in earnings, a historic valuation gap and the prospect for improving global trade under a Biden administration.»

Packing increasingly smaller and more powerful chips into servers and stacking them into heavy-duty racks lined up in rows in a data center generates a lot of heat and requires more electrical energy, not less. There is no «free lunch» regarding the laws of thermodynamics and physics . Weeks passed with no detailed data about the clinical trial being published, even though doctors were administering the drug with little information to guide them.