The rise of algorithmic trading was to blame for NextDC's 11 per cent share price slide since it released half-year results a week ago, the data centre operator's chief executive says.Craig Scroggie said he had spent the week meeting major shareholders – including Yarra Funds Management, Challenger and Vanguard – and most said the share-price movement did not reflect their sentiments about the company."Many shareholders have said to us that the market is interesting at the moment because there's been a lot more computer-led trading," he told The Australian Financial Review.NextDC's Craig Scroggie is confident about the company's long-term growth prospects. Anna Kucera/Fairfax Media"When the results came out, we looked at the volume of trading that was driven by computing platforms – we could get that data from the banks and brokers covering the company... From our observations it has certainly increased."Our shareholders are saying to us to not get distracted by the short-term share price machinations because there's nothing we can do about it and it just reflects the changes happening in investment management."RELATED QUOTESIn results announced last week, NextDC reported a 17 per cent revenue increase to $90.8 million and a 26 per cent jump in underlying earnings before interest, tax, depreciation and amortisation to $42.2 million. Since then, its share price has fallen from $7.08 to $6.32.The company lowered its full-year revenue guidance from between $183 million and $188 million to between $180 million and $184 million, but maintained its underlying EBITDA forecast of $83 million to $87 million.Mr Scroggie said the slight revenue downgrade was driven by the acquisition of property trust Asia Pacific Data Centre Group, as the company would no longer receive a dividend distribution, nor earn interest on the $232 million cash that went to the deal.RBC Capital Markets analyst Garry Sherriff has a 12-month price target on the stock of $8 and said he was confident the business would continue to benefit from the consumption of more and more data.Mr Sherriff backed Mr Scroggie's view that computer-led trading had increased, saying it was particularly a factor for mid-cap stocks."For these larger, mid-cap stocks there's index funds and quant funds involved, which can exacerbate some share price movements," he said."We don't believe the minor guidance downgrade at the revenue line was the trigger for the share price reaction. We believe it's more to do with the short-term views of some investors. Moreover we believe the recent share price pullback is a good buying opportunity."During the first half of the 2019 financial year, NextDC opened its second Sydney-based data centre to early customers, while expansion efforts continued at its Melbourne and Brisbane locations.The company is investing $2.25 billion in new sites in Sydney, Melbourne and Perth to prepare for an influx of data from the likes of drones, precision medicine and nanotechnology.Another substantial growth opportunity could come from international expansion; although unlikely this year, Mr Scroggie said this was a medium-term priority.He flagged markets such as Singapore, Hong Kong and Tokyo as potential locations and said he would like NextDC to be considered a market leader in Asia in the next three to five years."Before now we've had to get to a certain size and scale to ensure we could demonstrate that we're managing a sustainable business in one country, because when you go offshore it's infinitely more complicated," he said. "We do have customers encouraging us into major Asian markets. I don't have an exact date, but it is the next logical move for the company in the next 18-24 months."A survey of analysts on Bloomberg revealed an average price target of $8.25, with Evans and Partners' Paul Mason having the highest price of $14.46.Mr Sherriff said the continued growing demand for cloud infrastructure would be a strong tailwind for the company, along with the "voicification of the internet", increased data consumption and creation of Gen Z."An example is the 'voicification' of the internet, which is at an early stage of its life cycle, evidenced by the major tech companies and their voice-assistant products like Google's Assistant, Amazon's Alexa, Apple's Siri and Microsoft's Cortana," he said."These services generate huge amounts of data that needs to be stored somewhere, specifically in data centres."Headwinds we suspect are more around execution, and there are some investors that have taken a view around delay risks in terms of filling certain data centres within certain time frames. We're not particularly concerned about these potential short-term issues given our positive views on the demand equation."
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