CRWV: moving from Neutral to Bearish (bear put spread)
- BUY_TO_OPEN CRWV P 60 2027-03-19
- SELL_TO_OPEN CRWV P 40 2027-03-19
Why now. The bond market is pricing CoreWeave as a distressed borrower while the stock still trades like a recovery play. On October 15 its five-year credit default swaps hit a record 1,194.5 basis points. That level implies better than 60% odds of default within five years. Bonds sold in June at a 9.675% yield now trade near 15%, and the 2032 notes briefly fell to 76 cents. CNBC reported on October 19 that the yields stayed there even as AI stocks bounced. The shares sit at $59.66, just above the 52-week low of $59.25 and down from a high of $141.79.
What changed since the Neutral call.
- Insider selling. Bloomberg reported that the three co-founders have sold $3.3 billion of stock since the IPO, $2.4 billion of it this year. The sales run through pre-arranged plans, and there have been no insider purchases in 2026.
- Demand worries. Anthropic's Q3 revenue of $16.8 billion pointed to roughly flat growth in August and September, by Goldman Asia's math. That weakens the case that AI computing demand keeps rising fast enough to cover CoreWeave's debt.
- Industry pullback. Firmus, another Nvidia-backed AI cloud provider, and Holtec Nuclear both pulled their IPOs.
- Rising funding costs. If CoreWeave refinances at about 15%, its interest bill climbs while its expansion plans stay the same. The next test is earnings on November 9. The March expiry also covers the Q4 report.
Why a spread. CoreWeave's options are expensive, with IV percentile at 88 and 30-day IV at 110%. Selling the 40 put offsets part of the cost of the 60 put and caps the payout near $40. That is roughly where the IPO was priced, and it is a natural level for buyers to step in. Options liquidity is rated 4.
What could go wrong.
- Short squeeze. The stock moves about 2.7 times as much as the market (beta 2.68), so a rally could be sharp.
- Big backers. Goldman upgraded the stock to Buy with a $106 target, Deutsche Bank called the drop a buying opportunity, and ARK bought during the selloff. Nvidia CEO Jensen Huang said in public that CoreWeave is getting stronger. Nvidia bought shares at $87.20.
- Contract backlog. CoreWeave says its $104 billion backlog covers its debts. A cheaper refinancing deal or a big new customer contract could shrink bond yields quickly and send the shares above $60. In that case the full premium paid is lost.