Nebius Says It Is 'Sequencing' Its Financing After Getting $3.5B From Citi, With Bigger Asset-Backed Loans Still To Come

(MENAFN- AsiaNet News)

• Chief Operating Officer Ophir Nave said the Citi funding shows Nebius can choose“when and how we raise capital.” 
• According to him, the loan supports the company's near-term buildout, with larger financing still ahead.
• He said the company has $40 billion in long-term customer contracts that could serve as collateral. 

Nebius (NBIS) shares dipped in morning trade on Thursday amid the broader market sell-off after the company announced it had secured a $3.5 billion senior secured facility from Citi. 

Chief Operating Officer Ophir Nave said it shows the Nvidia (NVDA)-backed company can choose“when and how we raise capital.” The loan supports the near-term buildout, he said, and larger financing is still ahead.

“Sequencing our financing is how we optimize our long-term cost of capital,” Nave stated.“We still have a range of capital sources available to us to finance the next phase of growth.” He added that the company currently has $40 billion in long-term customer contracts that could be used for collateral. 

NBIS stock fell as much as 2.5% in pre-market trade and was among the top trending tickers on Stocktwits at the time of writing, with retail traders debating whether the new loan aids the company's AI build out or increases debt risk.

Nebius Short-Term Funding 

The facility matures in 364 days and initially carries an interest rate of Term SOFR plus 2.75%, rising to a maximum of 3.50%, subject to other adjustments. Nebius said proceeds will go toward data center development, GPU purchases and general corporate purposes. 

However, the loan comes amid mounting pressure on the neocloud sector. Investors have become more cautious about the debt required to finance rapid expansion, with CoreWeave (CRWV) at the center of the recent market turmoil.

Neocloud Credit Concerns

CoreWeave lost roughly a quarter of its market value last week during a sharp sell-off in its shares and bonds. Yields on some of its bonds climbed to around 15%, up from about 9.675% when the debt was issued last year.

Both NBIS stock and CRWV shares have fallen nearly 30% this month amid the sell-off. Piper Sandler cut its price target on Nebius by 22% to $185 on Wednesday, warning that neocloud stocks could remain“in the penalty box” until the financing outlook becomes clearer. Gartner has predicted that more than 80% of neocloud providers will cease operating independently by 2030.

NBIS, CRWV stocks price performance month-to-date on October 22, as of 8:00 a.m. ET. | Source: Kofyin

“We caught a lot of hate when we initiated CRWV with a $56 price target seven months ago,” Bernstein told CNBC on Thursday.“Today, it's a lot harder to find bulls - certainly some of them just don't call us anymore.” The firm reiterated its 'Underweight' rating on CoreWeave. 

How Is Retail Feeling About NBIS Stock?

On Stocktwits, retail sentiment around Nebius trended in 'extremely bullish' territory over the past day, accompanied by chatter at 'extremely high' levels. Platform data showed that message volume around the shares has more than doubled over the past week.

NBIS stock retail sentiment on October 22 as of 8:00 a.m. ET | Source: Stocktwits

One retail trader stated that although sentiment toward data center companies had deteriorated, Nebius remained one of the strongest businesses among major neocloud providers. 

View this Stocktwits post

Another trader said the Citi financing could help push NBIS shares back above $180.

View this Stocktwits post

NBIS stock is still up 90% this year despite the recent AI selloff, which puts the shares over 70% below its record high of over $299 seen in June.

Read also: Nvidia's Jensen Huang Wants AI Chips To Be A 'Financeable Asset,' Says Neocloud Demand Is 'Off The Charts'

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