The CoreWeave Stock IPO is a Billion Dollar Bailout.

fre IPO opportunities so they can get

bailed out to the tune of $2 billion so

they could pay their damn bills because

they went so deep in debt the company

cor weave may be IPO at the perfect time

that means the stock will be available

to trade very soon the only problem is

will it be a good investment well a lot

of that depends on what we think about

buying out that core weave

infrastructure and how much money it's

going to return in the future cor weave

is expected to trade under ticker C

rwv this week and raise over $2.7

billion for the company which is really

interesting because when you look at the

finances for the company and you look at

the history of the company you start

understanding that this former crypto

mining company called Atlantic crypto

where they mined etherum for yield

happen to strike literal gold during the

AI reol solution think about it ethereum

prices underperforming Bitcoin your gpus

collecting dust because you're not

making the yield you used to your break

even costs compressing and then all of a

sudden artificial intelligence comes

around and what does that do for you oh

let's just stop Mining ethereum and

start doing Ai and Lease our gpus to

other people who want to pay us to use

our gpus and our data center data

centers on a per hour basis this could

be companies that exclusively use cor

weave potentially startups or other

larger companies that don't want to

build out their own data centers or they

could be companies like Microsoft that

partner with cor for some of their

artificial intelligence needs think

about it this way let's say you have

you're Microsoft and you have this

really large machine at your home that

you need a lot of power for I don't know

let's say you need 100 units of power

for that but then sometimes you need 150

units of power you don't want to install

all of the Power needs to always Supply

150 so just do the 100 yourself and get

the other 50 from cor weave that's an

example of how cor weave could function

in its business model so just because a

company like Microsoft could use core

weave for Access flow or potentially all

of their work if they wanted to cor

weave creates this flexibility for

companies to basically use AI data

setters when they need it and dial it

back when they don't this is pretty

straightforward cor weave is basically

the infrastructure provider but they

also provide the software around that

data center infrastructure which is cool

because it means you know these

Executives were pretty smart in that

when the AI boom hit they're like okay

not only are we going to retool as an AI

data center play and we're going to

change the name of our company to cor

weave but we're also going to develop

our own in-house software to man manage

these data centers which is frankly

brilliant because I mean a it makes your

lives easier but B it also gives you a

USP a unique selling proposition to your

customers where like oh yeah come use

core weave for your AI infrastructure

needs we got the software that you could

just use because a it's easier for us

but B it's also easier for you to manage

you know what you're renting from us

including all the pricing uh changes and

and uh you know the turn off and uh turn

on and on functions and the allocation

functions of it anyway it's kind of

brilliant so when you look at cor weave

though what you really want to think of

them as is a giant generator of AI

services so remember that example I gave

where like if Microsoft needs extra

power think about cor weave is sort of

the power plant except rather than

providing power they provide AI data

center access which obviously has been

in massive demand over the 2023 and 2024

period because this has been sort of the

AI boom cycle now there are some

problems though with cor weave the first

problem that I think is worth paying

attention to is what industry experts

are saying the chairman of Alibaba today

wrote The Following quote I start to see

the beginning of some kind of bubble I

start to get worried when people are

building data centers on spec there are

a number of people coming up funds

coming up to raise billions or Millions

ions of dollars in capital to build AI

data centers but what happens if they're

out building these data centers and this

Data Center capacity without an actual

customer in mind and that's what Alibaba

chairman is worried about he's worried

that we might have actually overbuilt AI

infrastructure with now a lot of h100

chips which are kind of the older

generation right and we might not

actually need that many data centers cor

weav has got somewhere around 250 ,000

Nvidia chips Elon musk's got around

100,000 Nvidia chips at his Tennessee

you know xai data center but the h100

chips are already the old version in

fact Jensen Wong at the Nvidia GTC event

literally said you won't be able to sell

h100s to anyone and that well he kind of

Bas he said it a little bit more bluntly

than that he basically said you couldn't

even give him away which is bad because

it kind of suggests that the CEO of

Nvidia is literally suggesting the value

of h100 chips could be pretty dang low

when their new chip sets come out now

that's a downside now the upshot to this

is hey you've got companies in China

that are reporting like ant for example

Jack Ma's an who co-founded Alibaba Jack

ma uh and the Ant company they suggest

hey you know we don't necessarily need

the latest and greatest chips in fact we

can do a lot of our work with older

generation chips and then just use the

more advanced chips for the final stages

training llms or inference solutions

that require heavier Duty chips uh this

piece This research piece I actually

broke it down uh let's see here I'll put

that on screen so you can actually see

it so it's right here so our

experimental findings have demonstrated

that 300b I mean okay you don't need to

know can be effectively trained on Lower

performance devices while achieving

comparable performance to similarly

dense models such as deep seeks version

2.5 blah blah blah just I'm going to

translate this English here in the

pre-training phase you can basically use

cheaper chips which is potentially good

although it does make some people

question

companies like the dominance of

companies like Nvidia because you know

hey you could just go to AMD or you

could go to other chip creators such as

chip manufacturers or designers in China

that uh compete with AMD or Nvidia

especially more likely after this trade

war that uh is undergoing you know

occurring under Trump uh and Trump has

directly argued that there will be

specific tariffs on chips now if that

happens or not remains to be seen But

the argument here is maybe there's still

demand for older chips right so I'm kind

of giving you a pro and a con here on

one hand we might be overbuilding data

centers on the other hand that's okay we

could still make use of the older chips

but just remember what you're getting

with core weave are a lot of h100 chips

and again the CEO of Nvidia says you

couldn't even give away Hoppers uh now

that's obviously a big claim so I should

point it out to you in the actual video

it's at 1 hour and 19 minutes in in the

GTC presentation and just listen to

Jensen saying it himself because cor

weave has a lot of these and it's kind

of important that you hear this because

I kind of think they're

iping well I'll give you my opinion in

just a moment and what their balance

sheet tells us let's just listen to this

for a moment hey just a quick update

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h.com you know I've said before somebody

actually asked you know why would I say

that but I said before that when

Blackwell starts shipping in volume you

couldn't give Hoppers

away and this is what I mean and this

makes sense if anybody if you're still

looking to buy a hopper don't be afraid

I'm it's okay

but I'm the chief re

Revenue

Destroyer my sales guys are going oh no

oh don't say that I like Jensen okay I I

think he's actually a very sincere

person and I like Nvidia a lot and don't

get me wrong I I don't have bets on

either of these plays like you know for

NVIDIA or against cor weave I don't care

I'm just trying to provide information

on YouTube because I think when I

provide value on YouTube you might

consider subscribing to the channel and

coming back for more value and that's my

job I sit here and try to figure out how

can I provide you value on a daily basis

and I think when you you know when

you're like me and you research this

stuff I watched that Jensen interview

and I didn't say to myself oh okay you

know I'm going to I'm going to make a

whole video on this I didn't even know I

would ever reference it again it was

only right now when I'm going through

the core weave documents for their IPO

their S1 I'm like oh wait a

minute what what did Jensen say again

that's right so now you kind of make

these links and these are the kind of

like aha moments that I tried to provide

to you now I'm not saying that they

don't have black Wells of course cor

weave has black Wells but most of their

infrastructure buildout occurred in 2023

and 2024 you could literally see it

right here which most of that actually

excuse me I would venture to say almost

all of what you see on this balance

sheet is Hopper infrastructure because

Blackwell only started shipping at the

end of 2024 we don't even know if that

shows up in plant property and Equipment

yet or if it's just you know showing up

as restricted cash because the product

hasn't actually shown up yet and haven't

paid for it yet right but they have

orders for it I don't know but the point

is look at this explosion in the balance

sheet and I want to show you a risk

because look at this plant property and

Equipment exploded from uh I mean

nothing in like 2022 to 3.4 billion in

2023 and then 11.9 in 2024 these folks

were doing whatever they could to in

Europe in the United States anywhere

they could sell you an AI data center at

low latencies they were doing it

they went all in and honestly they did

it at the perfect time they wrote they

caught the wave and they wrote it

perfectly I'm jealous of these bastards

they did so well with their timeing

honestly good for them like they they

played it perfectly wow we're sitting on

all these gpus for ethereum let's get

into AI data center Leasing and make

some software around brilliant boom

billionaires overnight okay I don't I

think that is so smart but as an

investor you you should be asking

yourself what am I buying or what am I

doing to bail this company out yeah

don't get me started on the bailout

that's coming in just a

moment so this company

3.4x their plant property and

Equipment assets from 3.4 billion to

11.9 in one year they basically plow

money into Data Centers right now this

company has cash and cash equivalents of

$1.7 billion but they have bills to pay

of 3.6 they are $2 billion short they

need a bailout they literally don't have

the cash to survive the next 12 months

unless they get bailed out by retail

investors being promoted this stock

through Robin Hood preo opportunities so

they can get bailed out to the tune of

two billion dollars so they could pay

their damn bills because they went so

deep in debt to build data centers cuz

there was no limit to the amount of

demand that people thought there would

be for data centers the only problem

here is what happens when all of a

sudden that demand starts drying up and

people aren't asking for your AI data

centers that much anymore because either

they don't need as much h100 compute

power because it's the older version or

because they just straight up don't need

as much h100 computer power anymore

because maybe it was overbuilt just like

the Alibaba CEO says not my opinion I'm

just putting the connections together

see I'm taking from Nvidia I'm taking

from Baba and I'm combining it with sort

of experience and logic into their S1

and then giving you perspective now you

could say hey ma'am look they're going

to make plenty of money they're going to

grow Revenue blah blah blah great we

hope that they do but understand when

you look at this balance sheet this

company does not have enough money to

get through the next 12 months and the

only way they're going to survive is by

either dumping stock onto retail share

holders buying it at IPO and it could do

really well or raising more debt to pay

for their existing debt again I'm not

here to say the Stock's going to go up

or down or whatever I'm here to tell you

what's going on the finances are such

that they need money they need about 2

billion which is really interesting

because if you look at the estimates for

what they plan to raise they're about

$2.7

billion it's right here so it's kind of

interesting now this is going to be

great so let's get past this okay so now

let's say they IPO they raised the $2.7

billion if the stock crashes cor weave

doesn't care because now they got their

bills paid for the next year and they've

got their big fat IPO paychecks and

bonuses good for them no shade at that

at all the question is is this a company

that I want to buy okay well to

understand that we have to understand a

little bit about their revenue and how

sort of their revenue works and what

projections could reasonably be made off

off of this so uh we have that on screen

right here so most of this loss that you

see right here is a loss of fair value

related to bonds I actually don't think

this loss is that bad and I actually

think in 2024 they did a a good job

making money uh they actually made money

when we look at uh uh you know taking

out depreciation and these fair value

adjustments because most of this

technology and infrastructure here about

$800 million of that in 2024 is actually

depreciation so they don't line that out

which is surprising to me because if you

do that you actually kind of get more

bullish on these numbers uh they also

have a lot of interest expense but then

again they did whatever they could to

beg borrow and plead to build up these

data centers because that's that's the

ride they were waving there's a lot of

demand I mean anybody would have done

the same thing so again I don't blame

them I'm just saying I think they're

kind of trying to IPO a peak here which

is smart also I'm telling you these

people are geniuses we don't have enough

money we're at Peak AI deployment we're

probably at Peak AI use in 2024 at least

for Hopper chips which is the

infrastructure that they have anyway and

things are getting uncertain in the

economy quick IPO before it's too late

and tariffs crush us into a recession

and oh my gosh AI demand slows down and

people realize we've overbuilt data

centers you know and obviously then the

stock drops off a cliff but that doesn't

have to happen right away you know the

stock could be up 50% on IPO day because

usually what they'll do is they'll pre-

price it at like $50

and then it'll trade for like $75 or $80

and it'll be like oh my gosh it's up 50%

on IP day they do that by just limiting

how many shares are available because

they want it to seem like it's up a lot

on IPO day so more people get foam wo

and buy it yeah it's just like this is

Wall Street Wall Street is literally let

me put it this way somebody at the

Security and Exchange Commission once

told me this line you ready for this

Securities are sold not not

bought think about what that means for a

moment Securities are sold not

bought well what it means is you have to

sell you got to sell the sizzle that's

what an IPO is why do you think they put

a banner on Times Square or the NASDAQ

is or the party that they do over in uh

you know on on on Wall Street if you're

iping at the New York Stock Exchange why

do you think they parade these because

it's part of the marketing which is

normal none of this is abnormal what

matters more is that we understand this

Revenue section right here of course the

revenue looks like it

exploded but you have to also consider

that they brought the difference between

11.9 and what 3.9 worth of assets online

so 11.9 minus 3.9 they brought about $8

billion of servers online imagine you

bought $8 billion of rental real estate

do you think your rental re Revenue your

Top Line would go up well of course it

would now the question is did it go up

by a greater multitude yes or multiple

rather yeah it actually did see if we go

back to the balance sheet they oh they

had about 3.4 rather than 3.9 so that

means they added about 8.5

billion uh they 3.4x their plant

property and Equipment but their

revenues actually exceeded that their

revenues popped up to the tune of 1950

by

228 uh oops 19 15 ided 228 their

revenues actually popped up by about

eight times so that's pretty good an 8X

increase uh in their revenue in exchange

for uh what did we say here 11.9 divid

by 3.4 about a

3.5x in an infrastructure buildout or

you know an increase in infrastructure

buildout not bad it is possible though

and this is what some folks are

speculating that a lot of this is

because this infrastructure really

didn't start producing Revenue until in

2024 so in other words there was some

delay in getting the 2023 revenues

online from the plant property equipment

making that growth seem a little bit

more extreme that's a little hard to say

but so far if they're bringing in $1.9

billion and their costs of Revenue are

around 493 million less depreciation and

not a lot of sales I mean these people

sell themselves which is honestly really

good like this is amazing very very very

little sales effort here they're

actually doing pretty dang well because

again add back in depreciation to their

operating income they're bringing in

somewhere around a billion bucks which

if you look at that that's about a 99.4%

operating return just on their plant

property and Equipment their servers now

the question is do we want to invest in

this company that has a 99.4% return on

their assets you know before interest

right we got to consider interest as

well so if you take off the interest of

$360 million that return is going to go

down a little bit but just ignoring

interest for a moment uh we're going to

look at operating income 1.9 million

that's that number right there look at

operating expenses minus

1.59 equals we got 31 right now we're

going to minus out interest uh minus. 36

uh and then what I'm going to do is I'm

going to add back in about $800 million

of depreciation you could get that

number in the actual uh financials so I

add that back in uh and we're doing

pretty well we're making somewhere

around $800 billion versus about 1 to

1.1 is without that interest 8 billion

or sorry $800 million off by zero here

$800 million divided by about 11.9 in

assets uh is a return of about 6.7% net

of Interest 6.7% return on their server

infrastructure pretty damn good these

are rough numbers here right but the

point is if we're at about a 6.7% return

on infrastructure after interest or

99.4% excluding interest because they

could always refinance that debt in the

future if rates come down uh then the

question is is that return going to stay

steady or can we grow it and that's

where the big question marks are what is

the growth going forward now there are a

lot of different thoughts on this my B

thing that I'd like to ask is and this

is what I would want to know as an

investor is do we see pricing decays one

of the problems that I've seen so far is

cor we actually changed their pricing

model so you can't see it as well on the

way back machine from a per GPU to a per

instance basis so it kind of makes it

harder to find out hey you know what has

their pricing looked like what kind of

pricing power do they have now you do

have a piece out from the information

which provides a little bit of color

which we'll look at in just a moment uh

but that that makes me curious so I

would love some insights on like hey how

are we doing here which to me probably

means we'll have to wait a few quarters

and let some of that IPO hype go away so

we can really start seeing what are they

saying in their earnings calls in terms

of pricing power to is is revenue act

like what is revenue actually growing at

that's what I'd like to see and how much

are they continuing to invest in new

infrastructure because right now they

spent about

2.4 let me see here uh let's see ah yeah

okay there we go so net cash provided by

operating activities was about 2.7 in

2024 but their purchases of plant

property equipment around 8.7 so the

free cash flow negative to the tune of

about five bill because they're throwing

it all back into servers the question is

what happens when that server you know

expansion this right here slows down are

we going to see a big slow down in

Revenue growth obviously it's not going

to look as meteoric as this Revenue

growth that we've seen over here we

already know that that's why I'm looking

at sort of a return on assets because to

me I'm if I'm investing in this company

I'm buying h100 chips the old stuff and

I want to see that continue to print

money but that does create risks because

people might be going into this thinking

you know this is the next biggest and

greatest AI play that's like an open AI

or something is really just you're

buying a company that's just going to

lease out the chips I'm not saying

that's a bad thing just something to

keep in mind now the information has

some interesting projections because

they argue that JP Morgan and Goldman

Sachs suggest that cor weave's revenue

is going to explode to $4.6 billion this

year which is great that's about a 2.4x

increase now markets already know this

so this could already be priced in but

that's going to come by increasing their

cash Burn by nearly

3x which probably means their

infrastructure Investments are going to

rise to close to $20 billion maybe1 18

but $20 billion divided by what they

spent last year about 8.4 would be about

a 2.4x in infastructure so in other

words they're still plowing money into

more uh uh you know data centers which

is good because it's a promising sign of

demand or we're

overinvestigation ala says but this

Revenue growth a lot of people might go

oh my gosh they they grew from you know

$15 million of ethereum Revenue to 228

to 1.9 now to 4.6 they're making so much

money most of that is debt financed

infrastructure again you go from you

know uh uh $3 billion of rental

properties to 11 billion to potentially

next year $30 billion of data centers of

course your revenue is going to go up

but beyond that we don't have much guide

so I'm really curious to see what the

per unit Revenue increases are for this

company this is expected to be a really

big IPO and a lot of people are going to

make a lot of money on this mostly the

Insiders already and so there's going to

be a lot of hype in marketing expect

this to be one of the most hyped up IPOs

of the year and I think they're doing it

potentially still relatively close to

the top of the market at a brilliant

time for them because if we are at sort

of the peak of how much they could earn

renting out these data centers and we're

at the peak valuation for an h100 data

center that Nvidia CEO J suggest could

end up being you know

worthless then they're playing their

cards really well here congratulations

to the executive staff for being really

really smart if thean company nah man AI

data centers take on as much debt as

possible and before you crushed that

Peak IPO would dump it all on retail

there you have it thanks so much for

watching and see you in the next one

subscribe for more bye why not advertise

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have done so much people love you people

look up to you Kevin PA there financial

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great to get your take