Key Takeaways
- CoreWeave stock fell 23.9% in the past week (through Monday’s close) and hit a new 52-week low. Most of the drop came on Wednesday, when its 2032 notes fell below 80 cents on the dollar.
- The bond selloff makes it more expensive to fund CoreWeave’s planned $35 billion to $39 billion of capex this year.
- CoreWeave expects $860 million to $940 million of interest expense in the third quarter, against $200 million to $260 million of adjusted operating income.
- Goldman Sachs upgraded the stock to Buy on Monday, but the bounce faded, and third-quarter results in November are the next real test.
CoreWeave (CRWV) stock is down 23.9% in the past week (through Monday’s close), and it touched a fresh 52-week low on Monday. Nebius (NBIS) fell 19% in the same neocloud selloff, but CoreWeave’s bonds were at the center of it.
The bonds broke first
On Wednesday, CoreWeave’s 9.625% notes due 2032 fell below 80 cents on the dollar, about a 15% yield, and the stock dropped 15.5%.
CEO Mike Intrator pushed back in a memo to staff:
“When you are building a new type of technology company there will be periods of time when the market misunderstands and acts irrationally.”
He also said the backlog more than covers the debt. After a 5.9% bounce Thursday, the stock fell another 11.9% on Friday as worries about rate hikes and AI financing hit tech.
That debt has piled up fast.
And by June 30, it had reached $51.6 billion.
TIKR tracks 41 analysts on CoreWeave. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on CoreWeave, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See CoreWeave’s Analyst Ratings
Every new dollar costs more
The selloff makes CoreWeave’s next loan more expensive (the notes’ fixed coupon keeps today’s bill where it is), and it plans $35 billion to $39 billion of capex this year.
Second-quarter interest expense was $640 million against a $49 million operating loss. Management guides third-quarter interest to $860 million to $940 million, nearly 4x the $200 million to $260 million of adjusted operating income it expects.
The bull case leans on Nvidia (NVDA), which has agreed to buy CoreWeave’s unsold capacity through April 2032. Nvidia CEO Jensen Huang [told Bloomberg](LINK NEEDED) on Thursday that CoreWeave’s “cost of capital is actually decreasing.”
The bond market disagrees.
Goldman upgraded, and the stock shrugged
Goldman Sachs upgraded CoreWeave to Buy on Monday, though it cut its target to $106 from $139. CoreWeave’s 7% premarket pop, shared by Nebius and other neoclouds, faded, and the stock touched that new low.
Monday’s other calls ran from MoffettNathanson’s $89 target to Wells Fargo’s $160. The consensus has hardly budged.
At $140.58, the mean target sits about 130% above Monday’s close. And at 1.7x forward sales, the stock is the cheapest it’s been in the past year, against a 3.9x average.
November is the real test
Intrator has said he’ll put the facts in front of the market on the next earnings call, expected in November. Watch interest expense against adjusted operating income, and what new borrowing costs.
My take: the bonds are pricing a real problem, and I’d wait for November’s numbers before buying. Of course, cheaper new financing or a strong backlog update could change that quickly.
So what is CoreWeave stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
