CRWV is a bull thesis due to >1GW active power at $43B market cap and ~$40M/MW short-term contract pricing enabling fast paybacks, outweighing concerns about new convertible notes and ATM share offering options.

On today's episode, what I really want to cover is two NeoCloud players, Nebius and Core just reported some amazing announcements.

Now, I'm going to go with Cororeweave right at the end of this episode. There's also some bearish things to consider.

Next, I want to jump into one of my favorite stocks. This is Cororeweave. Now, this is uh one of my favorite NeoCloud players right now. This is the reason I'm bullish in Neo in in Core is at a $43 billion market cap.

Yet, you have over 1 gawatt of active power. You can make a lot of revenue with that gigawatt when you kind of put it on a yearly basis and when all of that starts being charged really well.

So, I'm pretty excited, especially as some of their longer contracts are starting to pull over. They're going to be able to kind of get some of these pricings better on.

The other thing is this is a company that very similar when they model their solution of their business. It's after x amount of years, these GPUs already kind of pay themselves and then it's money after that.

But if now the pricing is going up and up and up in in GPU hour, the margin prices here and the margin re return is going to be amazing, especially for someone who has a lot of active power already, which is what gets me more excited about Core, right?

Over a gigawatt over a gigawatt of active power.

Now, Coreweave today announced something important, right? They usually focus on very much long-term contracts and long-term contracts tend to have shorter not lower value obviously.

So core though they did announce that they have signed shortdated customer contracts of approximately 3 to 6 months with pricing of approximately 40 million per megawatt. That is crazy because that's now almost a year payback on on compute.

So if they're able to do this for a whole year, and I do believe the dynamic of this in imbalance of supply and demand is going to continue for at least at least 2 years. For them to start now really focusing on shortdated customer contracts, it gets me excited because it is going to help them dramatically.

And then after a year, even if they if they pay everything back and now they just kind of make a long-term contract, they they'll have great margins on that compute. So this has massive infrastructure.

They're building like crazy and to me that gets me pretty pretty excited.

At the same time, I am more want them to kind of stay within the long-term contract because to me that's the safe for play. Uh and you don't move too much with volatility. So I don't want them to completely expand into the short-term data customer contract even though that's what the market would love.

I think there should be a good mixture of in between.

But now seeing some numbers that they're getting stuff at roughly 40 million per megawatt that's extremely extremely bullish in my opinion. I would love to have known on like what kind of of of solution was this, right?

Was this on a a GB200 on a GB300? Is this for short-term contracts on something upcoming like the Vera Rubin? I would love to hear more clarity on where they're trying to getting these types of deals.

Or maybe it could be a mixture, right? It that's the other thing. Could be some GB200s. It could be some H100s. And that's why the price H200s, it could be a lot of different things.

A mixture of older GPUs and newer GPUs. And that's why it's important to understand that it's we can't always compare all pricing and contracts to everybody else because there's so many different things that go in the contract itself.

Now unfortunately though you many people might be saying Jose that seems amazing. Why is the market punishing cororeweave? Unfortunately the company did increase that they are diluting shares and and they're also doing a few increasing debt.

So let's start off with the debt. So core did announce roughly 3 billion in convertible senior notes. The convertible senior notes typically have a lower a lot lower rate which is great.

It's what they're trying to do. But on the downside is it does add some form of dilution potential in the future. Not a guaranteed but some form of dilution potential in the future.

And to kind of combat that the companies tend to do something called cap calls. So the proceeds of these $3 billion which can actually go up to 3.5 billion. They have they have the ability within 13-day period to increase it by about 500 million.

I would be shocked if we don't see the 3.5 billion. I think that's going to happen. But they are going to use the proceeds for the covering entering of cap call transaction described below and also for general purposes like buying more GPUs.

So this is what we're seeing right now. If we're in a market where you can get GPUs and you can kind of pay them back within a year or two, it makes perfect perfect sense in my opinion.

Obviously, the market hates that. So that's where the market is punishing.

The second thing the second thing that we did see is core did announce at the market offering. They announced the establishment of an at the market offering program under which it may offer if applicable sell up to 35 million shares.

At the current price, I think it was about $2 billion. I forget the number. The ATM offering is being established to provide ongoing financing flexibility and to support Corw's objective of migrating its enterprise credit profile towards investment grade.

Cor has no obligations to sell any shares under the ATM program and will determine whether and when to do so based on market conditions, its capital structure objectives, and applicable restrictions.

So it does seem like more they're just giving in the option and and this is something they're not completely selling it right now but they have the option now to be able to sell up to 35 million shares.

The reason they're saying is just by having this option it does improve their flexibility in the financial world and it actually helps them in their form of credit profile.

So I wonder right I do believe Coref does have a leadership that is a little bit that tries to do things financial savvy. I wonder if this is just one of those. I don't know if we're going to be selling the shares or we're going to completely diluting, but at least this option opens up the opportunity for some flexibility and some credit improvement.

Yet, the market doesn't like it and and rightfully so, right? You're not going to like the debt. You're not going to like the potential dilution at the market offering, but to me, it's completely understandable, especially especially if you have a period right now where you can pay back things in about a year or so.

Now, some people might be wondering, Jose, why are they not just doing traditional debt if you're able to pay back within a year? I actually think that also is a great question to ask.

Those one-year paybacks are usually for short-term contracts, right? And I do believe even if they think they can get it, there's still a lot of risk if they don't do it, right?

So, I think they're going to stri do a mixture of short-term contracts and long-term contracts. And for that, I think the safer route, the safer route is to kind of do these these types of offerings like the convertible senior notes opposed to just direct direct loans like they were in the past.

I'm pretty sure in the future we're going to see them do that as well and it's completely understandable.

But for me, a market cap of $43 billion and you're sitting with over a gigawatt of data centers, I am pretty excited about this company.