u/Tw1nwarrior

Trades ~$18; my DCF base case is ~$48. The entire gap is execution and in a build-to-suit landlord model, management currently executing (delivering early, financing cheaply) is the best leading indicator that the contracted ramp actually converts to cash.

1. Cipher delivered its Black Pearl (Amazon, 15-yr) capacity 2 months early with rent commenced, priced its 3rd project bond at 6.0% (lowest yet, ~8x oversubscribed), and optioned a ~900 MW site for ~no capital at risk. Very rare to see players in this space delivering early.

2. The income statement - it looks ugly (revenue down to $25M, EBITDA negative $30M, $268M GAAP loss) but that's the wind-down: mining is being switched off and HPC rent only started in August. ~$150M of the loss is a non-cash warrant mark. I think this indicates the trough of the valley.

3. The balance sheet which is a $7.5B machine built on ~$6B of debt. It's mostly matched (non-recourse, fixed-rate, amortizing with the leases), but most of the cash is restricted for construction, equity is thinning, and shares keep grinding (~477M diluted).

4. Is the pivot tracking? Yes. Portfolio now 5.3 GW / 11 sites; the three signed leases ramp contracted NOI from ~$97M (2026) to ~$894M (2035), averaging ~$793M. Revenue inflects hard in 2027 as HPC overtakes mining.

5. The Abbott letter. Texas's new audit push delayed the ERCOT Batch Zero decision (near-term negative), but it's asymmetric: culling weaker developers makes a buttoned-up incumbent's already-approved sites more valuable, not less. I see this as bullish and CIFR already positioned where they want to be.

6. The DCF. Assumptions I'm running: WACC ~9.3%, terminal growth 5%, beta 1.77, mid-70s% terminal EBIT margins (backed by ~89% property-level NOI on triple-net leases), pipeline probability-weighted, and ~$3.6B net cash added (chunky.. a lot is restricted). Output: Bear $34 / Base $48 / Bull $66. Comps land ~$17, right at the market, so the Street is pricing in none of the ramp. Stress-testing I would see: terminal growth 5% to 3%, beta 1.77to 2.5, and haircut the restricted cash.

7. Risk vs. reward. Bear: negative EBITDA through 2027, $6B debt with completion guarantees, dilution, regulatory timing, tenant concentration. Bull: execution is the moat, the repeatable financing model is proven and improving, rent has started, the pipeline keeps compounding. After this quarter, the burden of proof has shifted toward the skeptics.

Question for the board. Do you think early delivery + cheapest-ever financing is a real leading indicator that de-risks the ramp or am I giving management too much credit too soon? And any assumptions you would challenge?

For those interested, I've written a full deep-dive on this on my substack: https://valentircapital.substack.com/p/cipher-digital-cifr-q2-2026-the-flywheel?r=91pu4&utm_campaign=post-expanded-share&utm_medium=web

MELI reported Aug 5 and I wanted to bring everyone's attention to some highlights. Q2 revenue $10.2bn, +50% YoY (+43% FX-neutral), first $10bn quarter ever. GMV +44%, TPV +56%, buyers +26%. And the stock dropped ~7%, because operating margin came in at 6.7% - roughly half of a year ago.

Looks like the margin compression is deliberate. PIX discounts and take-rate cuts in Brazil, cheaper shipping, credit card issuance up 60%+, logistics build-out. Opex actually fell 2.6pts as a share of revenue this quarter - they generated leverage and immediately re-spent it. Engagement data management reported implies its working - "ecosystemic" users (marketplace + fintech) grew 37% and generate contribution profit that's a multiple of the sum of single-product users. 'Flywheel' approach in action.

The real debate I'm seeing is with the credit book: $16.4bn, +75% YoY. Short-term NPLs (15-90 days) are near record lows at 7.0%, but the 90+ bucket went from 16.8% to 18.7% of the book in six months, with late-stage dollars growing 46% vs book growth of 31%. Management's explanation (duration mix, a few weak vintages) is plausible, but it's the number that decides whether this thesis works.

I ran my DCF on it: 13.6% WACC (revenue-weighted LatAm country risk, not a US discount rate), margins recovering to 12% by 2029, revenue to $82.6bn (~consensus), explicit haircut for the loan book. At my WACC, the current price implies a ~16–17x exit EBIT multiple. The market is basically pricing something between my base and bear.

Assumptions:

Bear - $1,314. The credit cycle turns: the 90+ bucket keeps deteriorating, provisions overwhelm the lending margin, growth investment gets curtailed into the downturn, and the market pays 12x trough-credibility EBIT at a 15% discount rate. About 31% below the current price. This is the scenario that permanently impairs capital.

Base - $2,323. Revenue compounds to $82.6bn by 2029, margins recover to 12% as the reinvestment dial turns, credit stays healthy, and the stock exits at 20x EBIT. About 20% above the current price.

Bull - $4,002. The engagement flywheel does what management says it’s doing: margins recover faster, the card cohorts mature into a structurally profitable book, and the market keeps paying 30x for a company still compounding at 20%+. Roughly double the current price.

I did a full write up of my thoughts over on my Substack for those interested: https://valentircapital.substack.com/p/watchlist-meli-mercadolibres-10bn?r=91pu4&utm_campaign=post-expanded-share&utm_medium=web

I'm curious what others think here: is 6.7% a trough by design, or does the margin harvest keep receding? This one is on my watchlist and trying to figure out if I am interpreting this correctly - if so could be a real opportunity here.