“Its Going To Zero”: CoreWeave Implodes As Stocks Finally Notice What Credit Has Been Screaming For Weeks

Yesterday morning we first pointed out that amid the ongoing data center bond rout (which we have been discussing virtually every day for the past month), the G-spread of former bitcoin miner turned data center, CoreWeave, had breached the “distressed” level of 1,000bps on its bonds due 2032, as the yield on the same paper topped 15% for the first time ever (a yield that one would normally find in CCC-rated junk bonds or worse) with its bonds trading below 80 cents on the dollar, a level known as deep distress.

Data Center debt getting smoked today. Coreweave unsecureds tag 1000 g-sprd bps for the first time ever. Oracle unsecureds trading like deep junk. Even Meta’s Project Beignet about to hit record wide https://t.co/bcwfOwViRn

— zerohedge (@zerohedge) October 13, 2026

The observation caught the attention of Elon Musk who responded to us, stating that “It’s not that supercomputer data centers are not in high demand, as they definitely are. However, getting money to build complex hardware systems with massive power, cooling & networking is not the same as doing it.“

One day later, the stock market finally noticed, what credit has been screaming for months – and we have been warning about for weeks and weeks and weeks – with CRWV stock which Jim Cramer said is the only neoclouod he trusts…

Cramer is saying that $CRWV is the only neocloud he trusts.

Meanwhile their bonds just spiked to 15%+ and they’re sitting on $35 Billion of debt with interest eating ~25% of revenue in Q2. Yet $IREN and $NBIS have way cleaner balance sheets. Hmmmm pic.twitter.com/HR63FuJF43

— Zeek | Insights (@ZeekTyt) October 14, 2026

… cratering more than 15%, its third biggest drop on record, and just shy of all time lows at $60.

Sure enough, the same equity guys who were pumping the name every day for months even as its credit spread were blowing out, are now turning against it, and on Wednesday, D.A. Davidson analyst Gil Luria, who has correctly referred to CoreWeave as “the subprime tranche” of AI (although we would say Oracle is just the same, and far more important) warned on a podcast that the “equity value is going to zero” if the company becomes unable to pay its expensive debt obligations.

Luria’s radar went off when he realized that CoreWeave is borrowing money at around 9%, but it is earning returns of just 1% on its investments. Even the 4% to 5% he said the company is targeting would fall short of its borrowing costs. He compared it to taking out a loan at 9% to buy Treasury bonds yielding 5%, a strategy he argued would destroy value.

CoreWeave – - considered the original “neocloud”, a batch of cloud-computing providers many of whom were formerly bitcoin miners, now focused on the artificial-intelligence market - reported $640 million in second-quarter net interest expense, more than double the $267 million recorded a year earlier, alongside a $626 million net loss. 

CreditSights analyst Jordan Chalfin told the Financial Times that CoreWeave had been “very creative” with its financing, but investors were worried about its long data-center leases and shorter customer contracts.

“If there’s an overbuild, why would [customers] renew their contract with CoreWeave?” he asked. 

The yield on a Coreweave bond maturing in 2032 hit nearly 15 per cent on Tuesday, up by around 1.5 percentage points over the past week.

Helpfully, Bloomberg chimes in that in a severe restructuring, creditors would have priority over shareholders. Yes, it’s called a Chapter 11 bankruptcy. 

That said, clearly Gil doesn’t think that happens soon: he still has a Neutral rating with a $100 price targe on the stock: about 50% higher than where it is trading today. In fact, of the 49 analysts covering CRWV, just 4 have a Sell/Reduce.

CRWV Co-founder Brannin McBee offered a sharply different view to the FT: “I don’t look at that as scary debt at all,” he said, arguing that borrowing allows CoreWeave to expand faster. (Narrator: the company’s debt is, in fact, debt).

The company is seeking cheaper financing from insurers to continue building AI infrastructure. Its combined debt and lease obligations stood at approximately $52 billion at the end of June. Visible Alpha consensus forecasts cited by the FT project $71 billion in cumulative negative free cash flow between 2026 and 2028.

The problem is that with the unsecured now trading above 15%, he won’t be able to find anything cheaper than its current capital structure. Unless, of course, the company files and there is a debt for equity exchange. Then yes – the new debt of the reorganized company would be far cheaper

McBee said CoreWeave as a whole could also reach investment grade within “a few years” even though analysts forecast negative free cash flow of about $25bn this year, $28bn next year and $18bn in 202.  But McBee argued the spending reflects expansion rather than weakness in the existing business. “If we stop building today, [we’d be] immensely cash-flow positive,” he said, unintentionally exposing the biggest weakness of the entire AI bubble: the moment one stops “building”, it’s all over… and so instead of doing that, every company would rather to just layer itself with as much debt as it possibly can to delay the inevitable day when it does, in fact, stop building. 

Judging by the stock price, that day is coming fast, and as an aside, on Polymarket, traders are now assigning a 17% probability to CoreWeave announcing bankruptcy by December 2027, with approximately $50,600 traded. The odds rise to 27% by 2029.

Not everyone is waiting to find out if the skeptics are right: three of CoreWeave’s co-founders have sold about $2bn of shares this year, according to S&P Capital IQ. McBee said the founders were diversifying their personal wealth, but that most of it was still in CoreWeave shares.

“We could go off to a ranch and retire,” he said. “But you’re watching us show up every single day and put our time into this business.”

For now… yes, because the bond market is willing to let you show up every single day. Once it stops, we sure hope for McBee’s ranch has a moat to protect it from all of its not so happy shareholders.