[JPMorgan: CoreWeave's Business Model is Robust, Market Concerns Over Debt and Cash Burn May Be Overblown] BlockBeats News, October 20, according to Bloomberg, JPMorgan analysts stated that investor concerns about CoreWeave's rising debt and rapid cash burn might be overstated. The company's financing needs are primarily driven by rapid expansion rather than poor economic performance of individual projects. Previously, rising bond yields exacerbated market concerns over its debt-fueled expansion, leading to a roughly 20% drop in the company's stock price last week. JPMorgan believes that CoreWeave's business model remains robust, with strong demand for computing power. Long-term "take-or-pay" contracts can secure customers before new capacity becomes operational. According to their calculations, the unlevered internal rate of return for a typical 5-year contract is approximately 15%, higher than the company's estimated weighted average cost of capital of 9% to 11%. After the contracts expire, re-signing GPUs could generate additional revenue. However, aggressive expansion is expected to continue putting pressure on short-term cash flow. The firm estimates that each fully operational 1 GW of capacity could generate $10 billion to $15 billion in annual revenue, but adding 1 GW of new capacity would require over $35 billion in upfront capital expenditure. The company may not be able to rely on cash generated from existing operations to fund expansion sufficiently until 2030. [Original Link]