Key Takeaways
- Csquare shares fell 12% today after short seller DF Research said the data center company is built on “failed” legacy centers and faces cash deficits.
- DF Research’s warnings about cash and debt match Csquare’s own figures, even though the business is still growing.
- Csquare spent $545 million on capital expenditures in 2025 against $172 million of cash from operations, and its total debt rose to $5.63 billion.
- Csquare’s third-quarter results after the close on Nov. 9 give management its first chance to answer.
Csquare (CSQR) sank 12% today after short seller DF Research called the data center operator “a debt-laden portfolio of legacy data centers.”
What exactly happened
DF Research previewed its report this morning and published the full report later in the day. Its main charges:
- Csquare is built on “failed” legacy centers.
- Its returns on new projects fall below its cost of capital.
- It leans on debt-heavy ABS financing.
- DF expects substantial cash deficits in 2026, and dilution for shareholders.
“Failed” has a history behind it. Csquare was formed in January 2024 by merging Evoque with data centers that came out of Cyxtera’s 2023 Chapter 11 bankruptcy. CEO Spencer Mullee sees that history differently: “The bankruptcy afforded us the opportunity to cherry-pick the most profitable centers,” he told DatacenterDynamics.
TIKR tracks 10 analysts on Csquare. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Csquare, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Csquare’s Analyst Ratings
The cash math is the problem
The business is growing. Second-quarter revenue rose 14.5% to $280.4 million, and bookings set a record for the 13th straight quarter.
But Csquare is spending far more on its centers than they bring in. In 2025, capital expenditures came to $545 million against $172 million of cash from operations, and the gap was even wider in 2024…
Debt has covered the difference. Total debt rose from $3.27 billion at the end of 2024 to $5.63 billion a year later:
Csquare used its July IPO money to pay some of that down, but it still lost $48.8 million in the second quarter, mostly on interest.
The dilution has already started, too. The IPO sold 50 million new shares at $21, nearly half again the 104 million diluted shares Csquare had through 2025. The stock now trades well below that price.
What’s next
Csquare reports third-quarter results after the close on Nov. 9. Watch whether cash from operations is catching up with capex, and how much debt the IPO actually paid off.
My take: “failed” is harsh on centers management picked out of a bankruptcy, but DF Research’s cash and debt math matches Csquare’s own figures. Until operations pay for more of the building, I’d stay on the sidelines, even after today’s drop.
Of course, record bookings could turn into cash faster than DF expects. Nov. 9 is the first chance to see it.
So what is Csquare stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Csquare could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
