Our Stock of the Week is TeraWulf, Inc. (WULF). WULF is a data center company that provides digital infrastructure. It has two primary businesses. It started as a bitcoin miner and a host for other mining companies, but has moved into High-Performance computing (HPC), AI Infrastructure, and data center hosting beyond bitcoin mining. WULF states, “We develop and operate integrated, sustainably powered data centres for energy-efficient, advanced digital applications.”
There are a number of larger data center enterprises, like Coreweave (CRWV), but WULF has unique strategic advantages that make it attractive. One of its most significant advantages is its access to cheap, clean energy. Its Lake Mariner site in upstate New York has access to both hydroelectric and nuclear power. WULF states that it has ‘unparalleled access to low-cost, predominantly zero-carbon energy.’
Another significant advantage of WULF is its relationship with Alphabet (GOOGL). Google is backing lease obligations for large hosting clients like Fluidstock. Google is initially backing $1.8 billion in lease obligations currently, which will increase to $3.2 billion.
Google has an equity stake in WULF through warrants that are expected to increase to a 14% stake in the company. Finally, WULF has a 10-year HPC colocation agreement that is $3.7 billion initially, with extension options that could reach $8.7 billion. Google is both a strategic partner and an investor in WULF, which gives it a tremendous advantage.
According to theFly.com, TeraWulf’s price target was recently raised to $23 from $22 at B. Riley. TeraWulf’s Q3 results beat expectations with adjusted EBITDA of $18.1M, despite a sharp stock decline, reflecting substantial progress at Lake Mariner and ongoing builds at WULF Den, CB-1, and CB-2. The company is increasing its annual HPC contract target to 250-500MW and advancing site acquisitions and financing plans, supporting its colocation growth and credit profile.
Technically, the entire data center group has been under tremendous pressure recently due to concerns about slow development, rising costs, and valuation concerns. WULF has fallen along with the sector, but has major technical support down to around $10.00. We are looking for some signs of support in this area. While we don’t expect an immediate bounce, there is a low-risk entry here with a tight stop. As always, we will not chase strength on Monday but will look to aggressively trade the stock as it develops.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell, or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and buy or sell at any time for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees, and affiliates of Shark Investing, Inc. and/or principals, clients, employees, and affiliates of Hammerhead Financial Strategies, LLC, directly or indirectly, controlled investment and/or trading accounts containing positions in WULF. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.
