CoreWeave Shares Rebound After 9.5% Drop as Jensen Huang Says Financial Health Is Improving, Deutsche Bank Sees Sell-Off as Buying Opportunity

TradingKey - On October 15 ET, CoreWeave (CRWV) dropped as much as 9.5% in early Thursday trading before recovering its morning loss of over 9%. A four-consecutive-day sell-off erased more than $10 billion from CRWV's market capitalization. As of Thursday, the stock had fallen over 22% for the week.

As of press time, shares of CRWV turned 1.6% higher to $66.83.

Source: Google Finance

Market concerns over CoreWeave's credit risk have intensified. On Thursday, a key indicator measuring the company's credit risk rose to an all-time high. CoreWeave's five-year credit default swap spread surged by up to 74.5 basis points to reach 1,194.5 basis points, hitting an intraday record high. In addition, yields on some of the company's bonds spiked above 15%, signaling that investor concerns over its debt repayment ability are heating up rapidly.

Deutsche Bank analyst Brad Zelnick stated that a combination of factors appears to have driven the recent sharp decline in CoreWeave's stock and bonds. However, he noted that it is difficult to find company-specific factors sufficient to explain this sell-off. Zelnick maintained his "Buy" rating on the stock and viewed the recent sell-off as a buying opportunity for investors.

Zelnick pointed out that the market is underestimating CoreWeave's strong customer base, demonstrated execution capabilities, order backlog conversion, and infrastructure performance. He also acknowledged that the company still needs to raise additional capital, but believes the financing can proceed steadily, backed by a robust customer order backlog.

In addition, statements from Nvidia CEO Jensen Huang boosted CoreWeave's stock price. Huang said that CoreWeave's "cost of capital is actually coming down" and that Nvidia does not need to backstop it because CoreWeave is getting stronger "every single day."