CoreWeave Shares Plunge 15% as Debt Sinks Into Distress Zone

CoreWeave, an AI cloud services provider, saw its shares close down about 15.46% on Wednesday, with a further drop of nearly 6% in after-hours trading, bringing its monthly decline to about a quarter. The company's bonds also fell into distress territory, while credit default swap costs surged amid mounting concerns over its highly leveraged expansion strategy.

According to Bloomberg, the $2.75 billion of 9.75% coupon bonds issued by CoreWeave in April traded at 81 cents on the dollar on Wednesday, pushing yields above 15%. Two unsecured bond issues maturing in 2031 and 2032 both fell below 80 cents, a level widely seen as a threshold for financial distress. Dow Jones Market Data showed the five-year credit default swap spread on CoreWeave rose to about 881 basis points on Monday, up sharply from 547 basis points at the end of June, implying a market-priced default probability of over 50% within five years.

CEO Michael Intrator sent an internal memo to employees saying the company has a backlog of more than $104.2 billion in orders, which he said "fully supports all debt obligations," attributing the selloff to "misunderstanding and irrational behavior." The company disclosed a second-quarter backlog of $104.2 billion, up from $99.4 billion in the first quarter, with more than $25 billion in new net customer commitments added in the third quarter.

Analysts, however, noted that a backlog does not equal cash, as fulfilling contracts requires ongoing investment in GPUs, data centers and power infrastructure. "If CoreWeave borrows at 9% and the best return they can get is 5%, then no matter how large the scale, it doesn't make sense," said Gil Luria of D.A. Davidson. On the same day, other AI infrastructure names including Oracle, Nebius, Dell and HPE also fell broadly, with high-yield bond markets under pressure.

The immediate trigger for the selloff was hotter-than-expected consumer price index data released Wednesday, which boosted bets on another Fed rate hike this month. The 10-year Treasury yield rose to about 5.19%. Despite the distressed bond levels, CoreWeave shares remain up more than 60% since its IPO in March 2025, with a market value of about $36.5 billion.