CoreWeave Inc. (CRWV): Upgrade to Buy: NTM datapoints on contract economics are likely to be more positive than the market expects

We upgrade CoreWeave from Neutral to Buy with 73% upside to our price target of $106 (down from $139 prior). The stock is down 43% since Aug 11 (2Q EPS) and 24% in the last 5 trading days, per our understanding due to a) ongoing volatility in the credit market, which raises questions on if and at what rate CoreWeave will be able to finance their next phase of growth; b) debate on demand for intelligence at the frontier vs. off frontier, and whether changing mix impacts token monetization at CoreWeave's customers, which in turn is key for the ecosystem to realize returns on compute investments. Going back to Finance 101, we see CoreWeave's enterprise value as being directly correlated to the magnitude and durability of the spread between its unlevered IRR and WACC — and we think investors may be underestimating the magnitude of upward revisions to uIRR, and overestimating the magnitude of upward revisions to WACC. We believe CoreWeave's ARR per MW, and therefore unlevered IRR, is biased