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I'm not certain, RickyT, but you raise some important points for consideration. My view is that NextDC could begin to produce free cash flow from its current data centers if it pauses further expansion and capital expenditures. Yet, if there are existing precontracts with clients, then it absolutely makes sense for the company to continue investing. When it invests in such a scenario, the short-term profitability might not fully reflect the underlying business growth. It's also in my mind that the NextDC management should be cautious with their spending. I hope they won't need additional capital raises and that the funds they have now will be enough to establish a strong infrastructure base, allowing them to generate ample cash to finance future projects. If that's not the case, my preference would be for them to scale back their investment pace and play a bit of catch-up instead.
What happens if Microsoft or Amazon build their own DCs. They have enough money. It seems too difficult and heavy investment with no moat other than infrastructure style investment but then valuation doesn't reflect infrastructure stock. Thank you for the write-up though.
When will NextDC actually make profit? It isn't yet free cashflow positive - Will it ever reach there?
I'm not certain, RickyT, but you raise some important points for consideration. My view is that NextDC could begin to produce free cash flow from its current data centers if it pauses further expansion and capital expenditures. Yet, if there are existing precontracts with clients, then it absolutely makes sense for the company to continue investing. When it invests in such a scenario, the short-term profitability might not fully reflect the underlying business growth. It's also in my mind that the NextDC management should be cautious with their spending. I hope they won't need additional capital raises and that the funds they have now will be enough to establish a strong infrastructure base, allowing them to generate ample cash to finance future projects. If that's not the case, my preference would be for them to scale back their investment pace and play a bit of catch-up instead.
What happens if Microsoft or Amazon build their own DCs. They have enough money. It seems too difficult and heavy investment with no moat other than infrastructure style investment but then valuation doesn't reflect infrastructure stock. Thank you for the write-up though.