CoreWeave Q2 FY12/25 Earnings Review
DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Read our full disclaimer, here.
Keep It Simple
By Alex King, CEO, Cestrian Capital Research, Inc.
Folks are getting all breathless about CoreWeave ($CRWV). But I think the play here is relatively simple.
The company is a high-end hosting business - you can read our opening note on the name here.
Alex King
At the moment, the capex is off-the-chart high, a function of being active in a market that has been able to raise so much money that it can spend it without thinking about it. We aren’t in a ZIRP/QE era in the economy at large, but in the AI economy there is so much investor cash available so cheaply that it basically has its own ZIRP funding environment.
$CRWV’s primary win is its order book (RPO) which stands at $30bn, about 8x trailing twelve months’ revenue. And its primary weakness is its balance sheet, which is carrying $8bn of net debt serviced by … nothing, because its cashflows are massively negative.
So how will this resolve?