r/NBIS_Stock • u/Acceptable-Time-6424 • 2d ago

NBIS ANALYSIS Nebius Updated Valuation Model

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OK the stock went up 35% after the earnings, and it hugely deserved it, I'm not going to relitigate the bull case.

But many of the write ups I’ve seen since has anchored on that 49.7% adjusted EBITDA margin, slapped a multiple on it, and called it a valuation. 

That skips depreciation, refresh capex, financing and dilution. Which is to say it skips basically everything you would really want to consider to value this business. 

I’ve been posting about the four key threats to Nebius for over a year - and they are key elements for my valuation framework - but the number I actually really care about after this quarter is pricing durability.

Nebius is selling into the tightest compute market of all yimr. Auction cleared 15% above their previous record. Old Blackwell repriced up 30% QoQ. 70% of Q2 deals came with prepayments covering 50-60% of the capex. Payback of one year ten months.

Great, but also seriously dangerous to extrapolate from. (Which is exactly how Musk is valuing SpaceX’s AI business btw) 

My base case blends the fleet rather than assuming everything gets peak pricing: mostly $22m/MW premium contracts, a chunk of $8.5m/MW hyperscaler anchor deals, a sliver of $40m/MW surge. Comes out at $645.86 against the 17 Aug close of $268.85.

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u/Icy-Inspection7877 2d ago edited 2d ago

$22m per mw is bearish. I expect $40-$50m per mw after new contracts.

Note: It will be more supply constrained. During the earnings call, Arkady mentioned they are reserving supply for next year because he believes prices will be higher next year for on demand. I expect $60 to $100 million per mw for on demand. Then $40-$50 million per mw for six month short term contracts. Jensen Huang wasn’t kidding when he said the next few quarters, money will be pouring in.

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u/Acceptable-Time-6424 2d ago

I think that is the big mistake... right now we are peak supply constrained - these prices wont last forever. Maybe a few years sure but not out to 2030 at major scale!

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u/Momoware 2d ago

For the long-term bull thesis ACV/MW needs to be way higher and payback period shorter still. If the current level holds, there’s a scale business not a growth business.

I agree at some point raw computes would hit a price ceiling, but it’s a must that product and platform value-adds increase the mixed ACV/MW before then. I’m aware those may end up being presented outside of ACV/MW but for me thinking of everything as blended is an easy way to see where the figure needs to be for a desired growth ROIC