CoreWeave heads for a steep weekly loss as its bond yield tops 15%
Shares and bonds fell again on AI debt worries.
CoreWeave's shares and bonds were set for steep weekly losses on Friday as investors worried about the debt behind the AI build-out while borrowing costs rise (Reuters, Investopedia).
The bond selloff
Reuters said CoreWeave bonds issued in June at a yield of 9.675% have fallen sharply, pushing the yield to about 15% this week. Reuters quoted Max Frumes of 9fin calling the company "the canary in the coal mine" for a market segment under more stress. Investopedia said the 15% yield puts the bonds in distressed territory. Reuters said the cost of insuring CoreWeave's debt rose past 1,000 basis points to record highs this week, per S&P Global Market Intelligence data.
The shares
Reuters said CoreWeave shares fell 15.1% from Monday's open through Thursday's close despite a 6% gain on Thursday after Nvidia CEO Jensen Huang expressed support. Friday morning the stock was down more than 6% in early trading (Reuters via The Business Times), and about 7.6% at mid-morning (Reuters). Investopedia said it had dropped nearly 25% for the week and lost more than half its value over the past year. Reuters said rivals Nebius and Iren were each down more than 5.5%.
Analysts were split. Evercore kept its outperform rating, Reuters said, arguing the market is treating a higher bond yield as proof the business model has stopped working. Index & Cie's Tommaso Leodari said "You cannot take CoreWeave as the poster child for AI." Quoted figures differ by source and time of day. Earlier coverage: the selloff and the bond yields.
