GDS Holdings Ltd (NASDAQ: GDS) experienced a substantial pre-market decline of 8.73% on Tuesday, following the release of its third-quarter 2024 financial results and updates on its international expansion plans.
The Shanghai-based data center operator reported revenue of RMB 2.97 billion ($422.6 million) for the third quarter, surpassing analyst expectations. However, earnings per share of RMB -1.12 ($-0.16) missed estimates by a slight margin. The company reaffirmed its full-year 2024 revenue guidance of RMB 11.34 billion to RMB 11.76 billion ($1.58 billion to $1.64 billion).
Despite the relatively positive earnings performance, investors appeared to be concerned about GDS Holdings' plans for accelerated international expansion. The company announced that its international affiliate, DigitalLand Holdings Limited (GDS International), had entered into definitive agreements for institutional private equity investors to subscribe for $1.0 billion of Series B convertible preferred shares. As a result, GDS Holdings' ownership stake in GDS International is expected to be diluted to approximately 37.6% on an as-converted basis.
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