Nextdc Ltd (ASX: NXT) shares closed 0.3% lower on Wednesday afternoon, at $13.51 a piece. The daily decline pushed the share price 17% lower over the month. It also means the data centre provider and operator's shares have now fallen 25% from their annual peak of $17.99 in mid-September.
Over the year, Nextdc shares are now 18.2% lower.
For context, over the past month, the S&P/ASX 200 Index (ASX: XJO) has fallen 6.5%. Over the past 12 months, the index has risen 1.5%.
Why are Nextdc shares tumbling?
NextDC has benefited from an explosion of demand for cloud computing, AI adoption, and general digital infrastructure needs over the past few months. But more recently, investors have started selling off the stock.
Nextdc's shares slid after the company suffered a huge protest vote against its remuneration report at its annual general meeting (AGM) last week. The company's chair, Douglas Flynn, defended the company's remuneration policies during his address to the meeting, but more than 71% of votes cast went against the adoption of the report.
Under Australian corporations law, a vote of more than 25% against a remuneration report constitutes a first strike. Two consecutive strikes could trigger a vote to potentially spill the board.
This week, Nextdc shares have also been caught up in the tech-led market pullback. The market has taken a beating this month as volatility surged, interest rate uncertainty spooked investors, and tech valuations came under pressure. Some high-quality Australian stocks, like Nextdc, have been dragged down with the broader market.
Are the shares a buy, hold, or sell?
Nextdc has an aggressive expansion plan to meet an ever-increasing demand for data storage and cloud services. This demand, combined with Nextdc's network-rich connectivity ecosystem, means the company is well-positioned to experience significant growth prospects.
I think the latest sell-off presents a good opportunity for investors to get in on a high-quality growth stock, ahead of the next price surge.
What do the experts think?
Analysts also think there is strong potential for a large upside ahead. According to TradingView data, 14 out of 15 analysts have a buy or strong buy rating on the shares. The maximum target price is $28.66. That's a potential upside of a huge 112.14% at the time of writing.
UBS has a buy rating on Nextdc shares, with a price target of $21.45. That implies a possible increase of 58.8% over the next 12 months.
Macquarie analysts are also a fan of the ASX 200 tech stock but are a little more conservative in their outlook. They hold an outperform rating and a $20.90 price target on its shares. This implies a potential upside of 54.7% for investors.
