Every so often a company pulls off a transformation so complete that the market stops asking what it costs.
This one used to do something else entirely. Today it rents computing power to some of the biggest names in technology, it has billions of dollars of contracts signed, and it says the capacity it’s bringing online this year is largely sold out. The transformation is real, and I’m not betting against it.
The trouble is the price:
Last fiscal year, the business everyone’s excited about brought in under $130 million of revenue. The market values the whole enterprise at more than $18 billion. Everything between those 2 numbers still has to be built, financed and delivered, and today’s shareholders are paying for the construction.
A great business can still be a poor investment when expectations run ahead of the cash.
Below is the name, the 5 numbers behind that gap, the scenario math on where it trades, and exactly what would change my mind: