It was a multifaceted perfect storm that hurt CoreWeave's stock.
It was a multifaceted perfect storm that hurt CoreWeave's stock.
It was nothing short of a brutal week for CoreWeave (CRWV +3.29%). The AI cloud computing company's stock was crushed, falling more than 20% as of Oct. 16. The cause of the precipitous fall is mainly twofold: debt and spending worries. Is it time for CoreWeave's shareholders to panic, or is this an opportunity?
$63.41+$2.02 (+3.29%)
NASDAQ · As of 11:37 AM ET 10/19/26
First, investor concerns regarding CoreWeave's debt load are real. The company has approximately $35 billion in total debt, compared to just $5.5 billion in cash. Net interest payments are racking up and hit $640 million in just the second quarter. The yields on CoreWeave's unsecured bonds are approaching 15%. S&P rates the company a B+, which is essentially junk bond territory.
The company's extraordinarily high capital expenditures this year are also cause for concern. CoreWeave spent just over $16 billion in the first half of 2026 and expects to spend up to $39 billion total this year. That's triple its revenue guidance of $12.4 billion to $13.2 billion.
Lastly, there's growing public resistance to data centers. States are considering imposing restrictions and moratoria to curb development.
So, with all this bad news, are there still reasons to invest? Yes, and it has to do with demand and CoreWeave's backlog. In the second quarter alone, revenue grew 112% year over year, and the backlog exceeded $104 billion. Even Nvidia's (NVDA +2.40%) CEO Jensen Huang came to CoreWeave's defense, saying that he's optimistic about the stock even after this plunge.
Aa long-term investor, I have reservations about CoreWeave right now, as many others do. I think this price drop presents an opportunity, but only for the most risk-tolerant. If buying CoreWeave now, I'd likely build a position slowly over time. The company needs to prove it can convert its backlog efficiently and manage its debt load effectively.
Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
Averytin News Financial update.