HAPPY TUESDAY TO THE STREET
Trump Media (DJT) lost $238M last quarter, more than 10x the year-ago hit. The one-time meme stock is now ditching its detours into crypto and online betting to refocus on posting.
The one growth engine left standing: selling high-frequency trading firms early access to Truth Social posts for up to $100K a month. Oh, and nuclear fusion, of course. The company is nothing if not diversified.
🟥 | US stocks slid today as the US resumed firing on vessels from its blockade of Iranian ports.
📈 | One Notable Gainer: Fermi (FRMI) jumped after the data center developer signing its first binding customer lease, worth about $6.5B.
📉 | One Notable Decliner: On Holding (ONON) plummeted on mixed Q2 results and downwardly revised full-year revenue guidance.
— Brooks & The Street Sheet Team
MARKET SNAPSHOT
S&P 500 Heatmap. Credit: Unusual Whales
Market Movers
APPLOVIN, ARAMARK, UPWORK
📉 | AppLovin (APP) fell after a downgrade to Neutral on rising revenue growth risk.
📈 | Aramark (ARMK) climbed on a fiscal Q3 beat and a raised full-year growth forecast.
📉 | Upwork (UPWK) slumped after Q3 guidance missed across the board.
📈 | Jabil (JBL) popped on an upgrade to Buy tied to a multiyear AI investment cycle.
📉 | Life360 (LIF) plunged as analysts pinned its EBITDA beat on a one-time tariff benefit.
Tomorrow's Trade Idea, Today
FAIR AND CSQUARE
Stock Spotlight
Overweight, Overhyped?
Wall Street fell hard for a data center operator that has been public for under a month. Bank of America’s (BAC) price target goes so far as to suggest the freshly-listed stock could double in the next 12 months.
Eric Luebchow is a believer too, albeit a qualified one. The Wells Fargo analyst rates the stock Overweight, but his more measured case rests on Csquare outgrowing peers on EBITDA, with the risk of higher leverage offsetting the stock’s ceiling.
Rent > Rerate
Csquare runs 80 colocation data centers in North America and the UK, and has traded on the NYSE only since July 16. Every bull case starts in the same place: AI demand for capacity is outrunning what the industry can build.
Thanks to that surging demand, Luebchow expects Csquare to renew its back book at mid-teens rates. He also sees the firm growing internal revenue 4-6% per year as supply tightens.
The catch: Morgan Stanley (MS) puts Csquare's debt at double its closest peer's, unwinding about a turn a year. Its rent spent servicing debt, per Luebchow, undermines the presumed expansion behind BofA analyst Michael Funk's +100% call.
Just How Much?
Six firms cover Csquare, and all six are bullish. But that’s where the agreement stops.
Targets stretch from Luebchow's floor to Funk's ceiling, for a firm operating undermodernized assets (its data centers average 22 years old) and carrying more than more than 8x debt to EBITDA.
Shares have barely budged since the July IPO, but everyone watching sees some value in the bones. The biggest question is, just how much?
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Do you own any shares of Csquare (CSQR)?
OVERHEARD ON THE STREET
💰 Nvidia (NVDA) lined up six asset managers to mobilize more than $500B in outside financing so customers can buy its chips without tapping their own balance sheets.
👶 The US Treasury proposed rules letting parents fund a child's Trump Account with pretax payroll dollars and employers contribute up to $2,500 tax-free a year.
🤖 Longtime OpenAI executive Brad Lightcap is leaving after eight years, the latest high-profile exit as the company gears up for its IPO.
🛰️ Vietnam's VinSpace signed a contract to launch its first satellites on a SpaceX (SPCX) rideshare mission in 2027.
🚀 A clause buried in Elon Musk's Tesla (TSLA) pay package would erase half his performance targets if SpaceX acquired the automaker.
MONDAY’S POLL RESULTS
Do you own any shares of Hewlett Packard Enterprise (HPE)?
▇▇▇▇▇▇ 🐂 Yup, I’m holding
▇▇▇▇▇▇ 🐻 Nope, not interested
▇▇▇▇▇▇ 👀 No, but I’m interested
And, in response, you said:
🐂 Yup, I’m holding — “I have owned it in the past. Made a little money and moved on when it went laggard. It looks like a heathy growth spurt is started so I will ride it until it goes laggard again. ”
🐻 Nope, not interested — “More IT budgets going into AI projects (thus less to hardware) and the increasing cost of memory won't bode well for HPE.”
👀 No, but I’m interested — “I think I will purchase my next Laptop first — even though they have gone up $200 in the past year — which is sure better than the stock has done.”
