NextDC faces ASX 50 demotion after 42% share plunge over Melbourne power delay

NextDC faces demotion from the S&P/ASX 50 Index after an earnings downgrade that sent its shares down 42% to a nine-year low, Grafa reported on 28 October 2026. Grafa said the fall followed community opposition to 22-metre power poles, which forced the data centre operator to delay expanding its Melbourne facility. The Motley Fool Australia reported that electricity distributor Jemena had suspended work on the infrastructure needed to supply extra power to M3, partly because of opposition from local residents and stakeholders.

Without the additional electricity NextDC cannot deliver all the contracted capacity it expected, pushing revenue and earnings back. Insights put the delay at about A$140 million of contracted revenue deferred and about A$3 billion wiped from NextDC's market value. A major capacity increase at M3, which has planned IT capacity of 225MW, is not now expected until 2028. Guidance for FY27 net revenue was lowered to a range of A$475–500 million, against the earlier A$615–640 million. Underlying EBITDA guidance fell to A$245–265 million, down from A$385–410 million.

The company also paused new developments and land purchases, is reviewing capital spending and is considering selling selected development sites. Grafa reported that NextDC would also consider placing power cables underground to support its balance sheet. Chief executive Craig Scroggie has given up his FY27 bonus opportunities, and the company is reviewing its leadership and governance arrangements, according to Insights.

Grafa said removal from the index could prompt more selling as passive funds adjust their holdings. It added that Genesis Minerals is expected to take NextDC's place in the top 50 if its A$12.6 billion merger with Vault Minerals proceeds. MST Marquee senior analyst Hasan Tevfik said NextDC's "natural home is no longer the Australian equity market, where its cost of equity can swing violently". MST Marquee has also flagged NextDC as a potential takeover target.

Morgans takes a different view, upgrading the stock from hold to buy with a $7.50 price target and calling the shares "incredibly cheap". The broker said the shares were trading at a discount of around 30% to estimated net tangible assets of about $7.50 a share. NextDC management expects the extra power at M3 to arrive during FY28, and the company confirmed it remains compliant with its debt covenants. The Motley Fool noted that affected contracts contain provisions that could let customers claim compensation or terminate in certain circumstances.

The episode has sharpened scrutiny of community acceptance for data centres more broadly. The Australian News reported that planned data centres by Goodman Group and NextDC were stopped in Sydney and Melbourne within two months after fierce community opposition. AirTrunk vice president of market expansion Tom Mackellar said assessing the impact on the local community and obtaining social licence is "absolutely a requirement" when assessing future development.