Nebius, Our Most Anticipated Earnings this Cycle

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Welcome to offtheticker - thanks for following along. We want to take the time to apologize to our loyal subscribers as we have been away from writing our newsletters but are excited to get back so it. We have both been studying for professional exams as they relate to our careers (CPA & CFA) and now that we have gotten through the thick of it, we are back to focusing our time on giving you all the weekly updates that we think are important to you. We also wanted to say congrats to our subscribers that have been following along and have seen massive gains on Rigetti, Nebius, and Lemonade. All three of these stocks have been over a 50% gain, with Rigetti over 120% gain since we first posted about it less than a year ago. This week we will be continuing our weekly Monday morning reports with the stocks that we are watching before earnings and where we currently see these stocks going post earnings, as well as our personal trading thesis around these calls, which is not financial advice.

Weekly Earnings Spotlight: November 10th-14th

Monday November 10th: Rigetti (RGTI): After Close

Tuesday November 11th: Nebius (NBIS): Before Opening

Wednesday November 12th: Cisco (CSCO): After Close

Thursday November 13th: Applied Materials (AMAT): After Close

Rigetti Quantum Computing:

If you have been following our newsletter you know how much we think that the quantum computing space could explode over the next couple of years. This conviction must be true for a lot of investors, as institutions have started to pour money into the stock. Since we posted about Rigetti Computing back on August 6th, the stock has grown from $16 to where it sits now as the time of this post at $34.50. This is over a 100% gain on a stock that has actually not seen the headlines to back it up, with this rise seemingly to be all correlated to the continued talk by major names like Jensen Huang, CEO of Nvidia, that quantum computing could be the future.

Although there has been a ton of praise around the industry, our thesis has continued to play out exactly how we predicted it would. We have always held the belief that positive news would greatly affect the stock, which would far outpace the revenue actually earned by the company. We think the same thing will hold true into earnings this week. We think that the company will most likely either miss on revenue or guidance will not be adjusted higher, and could even be adjusted lower, based on the slow adoption of these quantum computers among the industry.

A good sneak peak into this was IONQ, which is another quantum computing company that reported earnings last week. Although the company beat earnings, this was from a lowered EPS then the month before, which shows us that there seems to be a sense of reality hitting the industry. These companies continue to be money pits at the moment, with profitability looking bleak for the near future. IONQ reported a net loss of 1.5 billion as of September 30th shows the industry has a LONG way to go.

We are trading around these earnings by continuing to sell off, which we began doing around 45$, and waiting for the dip we believe is coming to possibly begin to buy more shares. We would like all of our readers to do their own research and make their own decision on how they want to trade around this stock. This is not an investment for the everyday retail investor and requires a level of risk appetite that is pretty high.

Nebius AI

All of our subscribers also know how big of fans we are of Nebius AI. We give ourselves credit for calling out this company to our subscribers before the Microsoft deal, which skyrocketed the company from around 55$ to over 100$, with the stock currently sitting at 115$. For our newer subscribers who are not familiar with the stock, please read our thesis in the link below on why we think this company is poised for MASSIVE gains.

Since this post the company has secured a massive deal with Microsoft that will have Nebius provide Microsoft with GPU-based infrastructure capacity, which will be delivered to the Nebius data center in NJ. This is a base contract of 17.4 billion dollars over the course of the next 5 years. What we love about this deal is the long-term revenue backstop that will allow Nebius to keep up with revenue and hopefully ride the Microsoft name to deals with other big names in the AI space.

We are expecting a small amount of this revenue to be recognized in Q4, which could send the stock soaring on the news, or positive news regarding a new data center being built in the UK could also send the stock soaring.

We are currently holding our position strong and if we see a dip after earnings, we will be aggressively buying with the hopes that the company will secure more deals in the future and be able to deliver on their current deal with Microsoft.

Oklo

The one stock that we have not previously talked about in our newsletter is OKLO, and we think that it’s for a good reason, although the stock price has been proving us wrong. The company is an advanced nuclear technology company that designs and intends to operate small, modular fast-fission reactors. Their main product is a compact fast reactor that can generate up to ~75 MWe of electrical power, with the aim of providing clean and affordable energy through long-interval refuelling and inherent safety features. Oklo’s business model is to build, own and operate these units (selling electricity via power-purchase agreements) rather than simply selling reactor systems.

The company currently has no meaningful revenue and negative operating and net income. It is currently being reported that the first invoicing likely won’t occur until 2028, and profitability is not expected before 2029, as the company has not yet had its first commercial reactor approved by the US Nuclear Regulatory Commission. Where we are really alarmed by this stock is the current price and valuation. The current market cap figures value the company at approximately 20 billion dollars to date, with the stock price soaring to $180, with a recent blow off the top of around 45%, before sticking at around $117.

We are expecting that current earnings will be another reminder to retail investors that the company is very far from any sort of profitability, with an already outrageous valuation, and are expecting the stock to drop after earnings unless the company makes a mic drop of an announcement of some sort of deal with a major energy buyer, almost like we saw with the Microsoft and Nebius deal.

There is one key piece of information that we are keeping an eye out for when it comes to the company, which all revolves around the regulatory side of the company. Over the last 50 years the use of nuclear has been almost prohibited from non-governmental use, with a very rigorous process for getting permit and regulatory approval from the government. Any inkling of a possible timeline for when this submission for permits may be submitted will give us a timeline of when we might want to begin to invest in the company. We think that retail investors will sell the revenue news and the quant funds algorithms will keep the fall going, but if there is mention of a timeline for the combined license application (COLA), we may begin to take a position around that time barring any changes.

That’s it for this week’s update and our take on how earnings might shape up. Wishing you a great start to the week and be sure to tune in Wednesday for a stock thesis you won’t want to miss!

The information provided in this newsletter is for educational and informational purposes only and should not be considered financial, investment, or legal advice. I am not a licensed financial advisor, and the opinions expressed are my own. Any investments, trades, or financial decisions you make are at your own risk. Always do your own research and consult with a qualified professional before making financial decisions. Past performance is not indicative of future results.

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