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 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 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
(Reporting by Shashwat Chauhan in Bengaluru; Editing by Mrigank Dhaniwala)
