On Oct. 22, 2026, short seller Dalrymple Finance, which publishes as DF Research, released a report on Csquare, Inc. (NYSE: CSQR). Csquare is a data center operator backed by Brookfield that went public in July 2026. According to TIKR, its shares fell about 12% on the day the report came out. DF Research calls the company a debt-laden portfolio of legacy data centers. It argues that Csquare's expansion plans cost more than management says and that the company will run short of cash in the second half of 2026.
These claims come from a short seller, a firm that profits when a stock falls. They are not findings by a regulator or a court. This article separates the short seller's claims from what Csquare has reported to the U.S. Securities and Exchange Commission (SEC).
What Csquare Is
TIKR reports that Csquare was formed in January 2024 by merging Evoque with data centers that came out of Cyxtera's 2023 Chapter 11 bankruptcy. According to TIKR, Chief Executive Spencer Mullee has defended the assets from that period, telling DatacenterDynamics that the bankruptcy let the company pick the most profitable centers. TIKR also reports that Csquare's total debt rose to $5.63 billion at the end of 2025, up from $3.27 billion a year earlier. It says the company spent $545 million on capital expenditures in 2025 against $172 million of cash from operations.
The short report, as summarized by Activ8Insights, describes the portfolio as 64 data centers with roughly 2.57 million sellable square feet and 389 MW of sellable power. It puts 2025 revenue at $987 million and EBITDA at $390 million. Per the same summary, the company's growth plan centers on roughly 670 MW of identified expansion capacity. Activ8Insights attributes the portfolio, revenue and EBITDA figures to the report and public coverage, so treat them as the short seller's and the summarizer's figures rather than audited numbers.
The Short Seller's Core Allegations
The Activ8Insights summary lists several main claims in DF Research's case.
- Build costs. DF Research estimates that adding capacity will cost about $12.50 million per MW all-in. It says management's figure is $4 million to $8 million per MW, which DF Research argues leaves out remediation and real estate costs.
- Returns. DF Research estimates a 5.3% return on invested capital, against an estimated 8.5% cost of capital.
- Pledged capacity. DF Research estimates that 76% of Csquare's sellable power is pledged to lenders in its asset-backed securities (ABS) financing.
- Cash flow. DF Research projects negative free cash flow of $296 million to $332 million in the second half of 2026, against roughly $120 million of cash.
DF Research also notes that a lock-up on Brookfield's 106.9 million shares expires on Jan. 11, 2027, according to the summary. A lock-up bars existing shareholders from selling for a set period after a stock offering.
None of these estimates has been confirmed by Csquare or found by any regulator. Measures like cost per MW and return on invested capital depend on assumptions that differ from one analyst to the next. The report is one party's analysis.
What Csquare's Own Filing Shows
Csquare's Form 10-Q for the quarter ended June 30, 2026 includes a liquidity table. As of June 30, 2026, it shows:
- Cash and cash equivalents of $120.8 million ($120,843K).
- Restricted cash of $209.5 million ($209,517K). The filing says this cash is held by a trustee and is "not available for general corporate use."
- Total available liquidity of $356.0 million ($356,023K), down from $522.5 million ($522,549K) at Dec. 31, 2025.
The same filing reports a net loss of $114.8 million for the first six months of 2026, compared with $48.8 million a year earlier.
The restricted cash is the main point of dispute. The $209.5 million is counted inside the $356.0 million total, yet the filing itself says restricted cash cannot be used for general corporate purposes. The filing describes the total as $330.4 million of cash and cash equivalents and restricted cash, plus $54.0 million of undrawn capacity under its revolving credit facility and variable funding notes, less $28.3 million for letters of credit. Readers can check the table in the filing.
The Law-Firm Notice
Plaintiff firm Levi & Korsinsky issued a release on PR Newswire dated Oct. 23, 2026, announcing an investigation into how Csquare presented its $356.0 million in liquidity, of which $209.5 million is restricted. The release says the 10-Q was filed on Aug. 10, 2026, and cites the Oct. 22 short report.
Announcing an investigation is not a lawsuit. The release does not say any wrongdoing has been found, and it invites investors who lost money to contact the firm.
Why It Matters Beyond the Stock
Several of the short seller's claims touch on issues that reach beyond the stock. One is how much it costs to add data center capacity, where DF Research's per-MW estimate and management's range differ widely. Another is how much of an operator's capacity is already pledged as collateral to lenders, which DF Research says is 76% of sellable power at Csquare. A third is how quickly a heavily indebted operator spends its cash while it builds; TIKR's figures show 2025 capital expenditures well above cash from operations. Csquare's filings and its upcoming earnings report are where these claims can be checked against company figures.
What Happens Next
According to TIKR, Csquare is scheduled to report third-quarter results after the market closes on Nov. 9. The Activ8Insights summary of the short report says the lock-up on Brookfield's 106.9 million shares expires on Jan. 11, 2027. Levi & Korsinsky's notice announces an investigation only. It does not say any case has been filed.
This article is for information only and is not investment advice.
