Switch Stock Climbs After Potential Sale Of The Data Center Provider

Switch, which reportedly is looking into a potential sale, could join the growing list of data center providers being acquired for billions by private equity firms.

Data center provider Switch reportedly is exploring strategic options about its future, including a possible sale, as the publicly traded company might become part of the massive acquisition wave hitting the data center market.

Switch, which has a market cap of $7.2 billion, saw its stock climb nearly 5 percent in after-hours trading to $29.50 per share as of Tuesday morning following a report by Bloomberg saying that Switch is working with advisers on its future with a potential sale ahead.

Over the past 12 months, there has been a slew of multibillion-dollar data center acquisitions, mostly by large private equity firms, totaling over $38 billion.

[Related: Equinix Acquires Four Data Centers From Entel For $705M As Global Expansion Soars]

Data center provider CyrusOne was sold to KKR and Global Infrastructure Partners for $15 billion. In late 2021, data center competitor QTS Realty was acquired by Blackstone Infrastructure Partners for $10 billion. Cyxtera Technologies, a global data center provider with dozens of data centers across the globe, was acquired for $3.4 billion in July by Starboard Value Acquisition, a private equity special purpose acquisition company (SPAC). Finally, American Tower recently acquired CoreSite and its 25 data centers for $10.1 billion.

“The level of data center investment required is too much for even the biggest data center operators, causing an influx of new money from external investors,” said John Dinsdale, chief analyst at Synergy Research Group, in a January interview with CRN. “Over the last 18 months there has been a very notable shift in buyers with private equity investors becoming a lot more active than data center operators.”

IT research firm Gartner projects global spending on data center systems will grow to $226 billion in 2022, up 11.4 percent year over year.

Switch Stock Up 11 Percent

Switch’s stock has been trading up 11 percent over the past five days as of Tuesday morning.

The Las Vegas-based company’s stock jumped from $28.24 per share to now hovering around $29.50 per share in after-hours trading.

Switch became a public company on the New York Stock Exchange in 2017 via an IPO.

In its most recent fourth-quarter 2021, Switch reported revenue of $161 million, up 26 percent, with a loss of $18.5 million. The company’s financial results included a $35 million noncash litigation charge, which affected net income, stemming from a lawsuit brought by fellow Las Vegas data center company Cobalt Data Centers.

For Switch’s entire fiscal year 2021, the company generated $592 million compared with $511 million in 2020.