GDS - Why GDS Holdings Plunged 25.1% on Tuesday
Shares of Chinese data center company GDS Holdings (NASDAQ: GDS) fell as much as 25.1% in trading on Tuesday after the company reported third-quarter 2022 financial results. Shares rallied some in afternoon trading but were still down 14.4% at 3 p.m. ET.
Management said revenue was up 14.9% to $332.8 million in the quarter, but the net loss was $47.7 million. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were up 10.9% to $149.9 million, but that highlights the company's debt problem.
Interest expense in the quarter was $62.4 million, nearly matching the $69.3 million gross profit. That doesn't leave much money left for sales, marketing, R&D, or general expenses. This is partly why GDS is losing so much money, and with $4.5 billion in debt on the balance sheet and another $1.3 billion in lease financing, there's a lot of debt to pay for.
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Why GDS Holdings Plunged 25.1% on Tuesday