Elon Musk ripped a company for storing government records in a mine. Now, DOGE may give Iron Mountain a boost

Elon Musk stood beside a seated President Donald Trump within the Oval Workplace on Tuesday and ranted about examples of presidency inefficiency his DOGE division was searching for to root out of the federal authorities.

“There is a limestone mine the place we retailer all of the retirement paperwork…This mine appears to be like like one thing out of the ’50s, as a result of it was began in 1955, so it appears to be like prefer it’s, like, a time warp,” mentioned Musk, who went on to clarify that the mine’s elevator pace determines the tempo at which the federal government can course of the retirements of federal staff.

“Does not that sound loopy?,” he requested.

That mine is run by a little-known firm named Iron Mountain, whose shares had been hit this week within the wake of Musk’s feedback.

However Iron Mountain CEO Invoice Meaney on Thursday mentioned that he sees the brand new authorities effectivity initiative led by Musk as a “progress alternative,” given the corporate’s different work in digital transformation with federal businesses.

“We see this as a continued alternative for the corporate,” Meaney informed analysts throughout Iron Mountain’s Thursday morning earnings name. Earlier, he mentioned this digitizing arm of the corporate aligns with the “drive to be extra environment friendly” throughout the federal authorities and famous “latest curiosity” in Iron Mountain’s federal enterprise dealings.

Meaney mentioned Iron Mountain rakes in $130 million in income from its information heart and digitization transformation companies. That determine dwarfs the $10 million earned from the federal government storing bodily documentation in websites just like the namesake Iron Mountain mine. In all, Meaney mentioned that $10 million accounts for lower than half of 1 proportion level of Iron Mountain’s complete bodily quantity.

The Pennsylvania mine, which was the concentrate on Musk’s statements concerning the firm, is the place the federal authorities homes and processes retirement paperwork greater than 200 ft underground. Positioned lower than an hour outdoors of Pittsburgh, the mine is billed by the corporate as providing “unbeatable” ranges of safety and safety from disasters.

DOGE — the acronym for the Division of Authorities Effectivity — has been central to conversations and criticisms round President Trump’s return to the White Home as Musk’s workforce scours federal businesses for fats to chop. Musk’s feedback concerning the authorities’s contracts with Iron Mountain carry consideration to a unusual setup for doc storage utilized by the federal authorities, which has been below Republican scrutiny for a perceived lack of effectivity.

Moreover, these feedback — and the corporate’s subsequent clarification of its work — can provide a roadmap for what corporations that work with federal businesses can count on amid the Trump administration’s concentrate on slashing spending.

Musk’s crucial evaluation of Iron Mountain’s work with the federal authorities appeared to harm the inventory as issues mounted that the contracts might be on the chopping block. Shares have dropped greater than 10% to this point this week, pulling the inventory down greater than 9% on the yr. (A big chunk of these declines got here in Thursday’s session as buyers reacted to the corporate’s slight miss on income expectations from analysts.)

DOGE posted photographs of the mine on X, the social media platform owned by Musk. Textual content accompanying the photographs famous that greater than 700 staff work within the mine, and Musk mentioned that at most 10,000 retirement functions will be processed every month by this method.

“As a substitute of working in a mine shaft and carrying manila envelopes to packing containers in a mine shaft, you would do virtually the rest, and you’ll add to the products and companies of the US in a extra helpful approach,” Musk mentioned.

In describing Iron Mountain’s work with authorities entities, Meaney informed analysts the corporate companions with greater than 200 federal authorities businesses as both a direct supplier or subcontractor of companies. Moreover, he additionally pointed to an settlement with a state authorities for a tough drive destruction program that can be utilized inside its businesses.

Wall Road, for its half, sees the inventory’s decline following Musk’s feedback and the DOGE put up as unreasonable.

“We view it as an enormous overreaction,” Wells Fargo analyst Eric Luebchow wrote to purchasers on Wednesday.

Luebchow mentioned the corporate’s income is just not pushed by any single buyer, which means that it doubtless would not take successful even when the federal authorities ended its take care of the mine. If the federal government does pull out, Luebchow mentioned it might doubtless should pay Iron Mountain termination charges that may quantity to round one or two years of annual hire.

The analyst additionally backed up Meaney’s declare {that a} concentrate on effectivity may very well be a boon for different elements of Iron Mountain’s enterprise.

Barclays’ Brendan Lynch agreed, including that the federal government has a authorized requirement to maintain data that Iron Mountain shops someplace.

“We see this as a non-issue,” Lynch informed purchasers on Wednesday, earlier than recommending they “purchase the weak point.”