nbis stock: Stock Splits and What It Means

Is Nebius Group Really Stock-Split Material? Not So Fast...

Nebius Group (NBIS) is making waves. Up 347% this year, and over 500% since its Nasdaq resurrection in late October 2024, it's got that "high-flier" label slapped all over it. The stock's flirting with all-time highs, surpassing even its Yandex N.V. days. The AI buzz is loud, cloud computing is the new gold rush, and Nebius is right in the thick of it. So, naturally, the stock split question is bubbling up.

But let's pump the brakes a bit. Stock splits are about making a stock seem more accessible, right? Lower price, more shares, same pie. Chipotle did it after hitting $3,200, partly to let employees get in on the action. But Nebius, at around $120 a share, isn't exactly breaking the bank.

The Price Isn't (Yet) the Problem

There are plenty of companies with significantly higher share prices that haven't split. Booking Holdings is over $5,200. AutoZone is pushing $4,000. Netflix, even after its decade-long split hiatus, is still over $1,100. Nebius needs to climb a lot higher before it enters that territory. The article Stock-Split Watch: Is Nebius Group Next? suggests $500 as a potential trigger point.

Nebius is burning cash building AI data centers. They pulled in $1.15 billion in a public offering, and another $3.16 billion in convertible notes. That's a lot of capital to deploy. They've got 220 megawatts of power now, with plans to hit a gigawatt next year. The Microsoft deal, a five-year, $19.4 billion commitment for GPU capacity, sent the stock soaring 200%. Big numbers, no doubt.

But let's talk about that revenue. Second-quarter revenue was $105.1 million, up a staggering 625% year-over-year. Impressive, sure, but the company isn't profitable yet. They’re touting adjusted EBITDA profitability, which is earnings before interest, taxes, depreciation, and amortization. (Essentially, profitability before all the real-world costs kick in.)

And this is the part of the report that I find genuinely puzzling. Look at that gross margin: -2007.45%. Yes, that's a negative two thousand percent. I had to double-check that figure. Usually, a negative gross margin means a company is selling its products or services for less than it costs to produce them. A negative gross margin of -2007.45% suggests something is seriously amiss. It's either a data error, a truly bizarre accounting method, or Nebius is essentially paying customers to use their services (which, admittedly, is a customer acquisition strategy some startups use).

The Margin Question

Now, I'm not saying Nebius is a bad company. The AI cloud computing space is hot, and they're clearly making moves. But that margin figure is a glaring red flag. It completely overshadows the revenue growth. It's like saying you're driving 200 mph, but your gas tank is leaking faster than you can fill it. You might be moving fast, but you're not going very far.

So, while the market is clearly excited, driven by AI hype and big-number press releases, a stock split feels premature. The company needs to demonstrate a path to sustainable, actual profitability, not just adjusted EBITDA. They need to address that gross margin issue, whatever it might be.

Show Me the Real Profits

A stock split is a cosmetic procedure. It doesn't change the underlying health of the company. Nebius has potential, but potential doesn't pay the bills. Until that gross margin turns positive – and stays there – the stock-split talk is just noise. I'll stick to the data, and the data says: not yet.