CoreWeave shares, bonds headed for steep weekly losses as AI borrowing concerns mount

By Reuters News

Oct 16 (Reuters) - CoreWeave's shares and bonds were headed for steep weekly losses on Friday, as investors grew uneasy about the debt financing behind the AI build-out in the face of rising borrowing costs.

The firm's shares CRWV.O dipped 4.1% in premarket trading on Friday, after jumping 5.9% in the last session.


Here are some details:

  • As of last close, the shares were down more than 15% this week, on course for their biggest weekly decline in about two months

  • AI infrastructure stocks fell this week as hot inflation raised borrowing-cost worries

  • "A hot inflation print triggered a sharp selloff in CoreWeave because its business model is a highly indebted play on future data center demand," BCA Research analysts said

  • "Although the rest of the tech complex is also sensitive to the pace and magnitude of AI adoption and use, it is, on average, considerably less sensitive to interest rates"

  • Shares of rival Nebius Group NBIS.O fell 1.5% on Friday morning, also set for their steepest weekly fall in two months

  • CoreWeave is a loss-making cloud company that has about $50 billion in debt

  • The yield on CoreWeave's October 2031 maturity dollar bond briefly surged past 16% on Thursday

  • The bond is set to decline for a fifth straight week, down about 3 cents on the dollar this week

  • Cost of insuring against CoreWeave's debt surged past 1,000 bps to record highs this week - S&P Global Market Intelligence data

  • As of last close, CoreWeave shares were on track to erase a fifth of their value this month

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