A short seller says Iron Mountain's data center bet barely covers its interest bill. The stock rose.

The charge: 81% of the capex, 13% of the revenue

JCapital Research, a forensic short shop with prior fraud-adjacent calls, published its short on Iron Mountain▼−2.29% — Iron Mountain, down 2.29 percent today (IRM), the records-storage REIT turned data-center landlord, on October 28, 2026, under the title "Data Centers don't justify the optimism"↗ ¹². Its public section runs on arithmetic: about 81% of total capital spending was flowing into data centers as of the second quarter, while data centers bring in only about 13% of revenue ².

By the report's count, the company holds roughly $17.3 billion in loans against $205 million of cash, borrows at an average 5.6%, and covered its interest bill 1.7 times last quarter, with net interest expense up from $488 million in 2022 to $829 million in 2025 ². JCapital also suspects Iron Mountain low-balls data center maintenance costs and depreciation, inputs that flatter adjusted funds from operations, the REIT cash measure behind the dividend ². The full report sits behind a paywall ².

The tape's first answer was to buy

The short was announced on October 28 ¹. The stock closed that session up 0.29% at $115.67 ³, rose to about $118.4 the next day ⁴⁵, and held near $116 at midday on October 30, down about 2%, while the Nasdaq 100 ETF (QQQ) dropped 2.8% ⁵⁶.

Short interest stood at 2.44% of float on October 15↗, before the report, at 5.1 days to cover ⁶. No gap down, no borrow squeeze so far: the market has either not priced the thesis or has priced it and disagrees.

The filings concede the arithmetic

Checked against Iron Mountain's own filings↗, the short's numbers hold. Capex exceeded operating cash flow in all ten quarters from the first quarter of 2024 through the second quarter of 2026, and total debt climbed from $15.2 billion to $19.6 billion over the same stretch ⁷. A REIT must pay out most of its taxable income as dividends, which is why that gap gets debt-funded ².

The 1.7x interest cover matches too: second-quarter operating income of $387 million against $225 million of interest expense ⁵. None of that is in dispute. The dispute is whether growth capex that lifted revenue 18.5% last quarter compounds into returns above 5.6% money, or stacks obligations onto a paper-storage business ²⁴.

The bull ledger

The bulls bring records. Second-quarter revenue hit $2.03 billion, up 18.5%; AFFO rose 17% to $433 million, or $1.44 a share, against a declared quarterly dividend of $0.864 ⁴. The data center, digital and asset lifecycle management businesses grew more than 50% year over year, leasing reached 110 megawatts year to date↗, and management raised full-year guidance to $7.94 to $8.01 billion of revenue ⁴.

The company pegs net lease adjusted leverage at 4.8x, its lowest since 2014 ⁵. Wall Street rates the stock eight Buys, no holds, no sells, with 12-month targets of $132 to $155 ⁵. A dividend newsletter had called the pullback a buy six days before the short arrived ⁸.

The last short seller's scoreboard

This is Iron Mountain's second forensic fight inside a year. On November 19, 2025 Gotham City Research published a short↗ alleging adjusted EBITDA overstated 25% to 35%, true leverage of 9x against a reported 5x, and dividends uncovered by cash flow for twelve years, valuing shares at $23 to $41 ⁹.

The stock bottomed at $77.77, then rallied to $129.49 by August 14, 2026, while short interest thinned from 3.8% of float in December to 2.44% ⁵⁶. Eleven months on, shares near $116 trade at almost three times Gotham's ceiling price ⁵⁹. That call was priced and, so far, rejected.

The verdict is scheduled

Third-quarter results arrive November 5↗ before the open, with consensus at $0.61 of earnings on $1.99 billion of revenue ⁴⁵. Three tells decide whether JCapital's call sticks: whether data center depreciation and maintenance disclosures answer the low-balling charge, whether borrow costs and options skew reprice, the move that typically comes first in episodes like this ¹, and whether capex keeps outrunning cash generation ⁷.

Iron Mountain's newest notes pay 6.25%, against the 15% CoreWeave▼−11.15% — CoreWeave, down 11.15 percent today agreed to pay on its debt, as reported here on October 17↗; lenders have already ranked the data-center borrowers ⁴¹⁰. The arithmetic is not in dispute. What the arithmetic means is the whole fight.