Do you have an opinion on Snowcap's research (https://www.snowcapresearch.com/) on STRL? The group has a short position on STRL. They are concerned about the what they believe are unsustainable margins for type of work that STRL is doing in the E-Infrastructure segment. It seems to be low margin site development only.
Hi Kh, I haven’t seen it, I tried to download the presentation but their system is down. Yes, construction in general is a low-margin business but this is data center builds that not anyone can do. A typical construction project has delays and imperfections. In data centers you need to hire a team that can deliver on time (without the risk of them going under half way through) so the hyperscalers are paying premium for that service.
Even from my days working at a telco, I knew that data center construction was more expensive that the rest, but we were willing to pay a premium rather than losing business.
Thanks for your in depth analysis.
Do you have an opinion on Snowcap's research (https://www.snowcapresearch.com/) on STRL? The group has a short position on STRL. They are concerned about the what they believe are unsustainable margins for type of work that STRL is doing in the E-Infrastructure segment. It seems to be low margin site development only.
Hi Kh, I haven’t seen it, I tried to download the presentation but their system is down. Yes, construction in general is a low-margin business but this is data center builds that not anyone can do. A typical construction project has delays and imperfections. In data centers you need to hire a team that can deliver on time (without the risk of them going under half way through) so the hyperscalers are paying premium for that service.
Even from my days working at a telco, I knew that data center construction was more expensive that the rest, but we were willing to pay a premium rather than losing business.