CRWV is a high-leverage growth company; its 2032 bonds sold off to ~15% yields on default fears despite management's $100B backlog. Partner delays would delay revenue and interest payments. The speaker doesn't expect collapse, cites valuable assets, sees another year to improve, and says valuation is closer to fair.

There are concerns about rising bond prices for companies such as Oracle and CoreWave.

Two prime examples of companies that have contributed to the recent market crashes are Coreweave and Oracle. I'll start with Coreweave , a new cloud computing company. Coreweave is a prime example of the expansion of AI devices ; its business model is simple but excessively leveraged.

Then, as you know, they worked hard to build sophisticated data centers , and then leased this computing power to external software developers. But in financing this growth, as is evident if you follow Coree, its growth has been phenomenal in every sense of the word.

It has accumulated huge liabilities amounting to $50 billion or more, depending on the quarter.

Therefore, one must look beyond the volume of signed contracts. The underlying cash flow dynamics needed to service this debt must be considered. We witnessed a critical turning point yesterday, as we were recording this video, Wednesday, October 14, when Coreweave's unsecured bonds, due in 2032, fell to less than 80% of their face value.

It has been trading at prices as low as 77 cents to the dollar, depending on the time of day. This is important because bond yields move inversely to their prices, and this sudden sell-off has forced their 2032 bond yield to rise to nearly 15%.

This suggests that the broader market views Corrie's debt from a high-yield perspective , as if it were a massive bond.

There is a high probability that seeing a return like this will raise concerns about default, and of course, this sharp rise in borrowing costs is reflected in the stock markets.

We have seen a significant drop in Korean stock.

Now, Corey's leadership has stated that this is an irrational act by the market. They say we have arrears exceeding $100 billion. We will not default on our debt obligations.

This may be true, but we clearly see that the fixed income market is not convinced of it at the moment . There is concern that institutional lenders may not be willing to cover such large capital expenditures when the path to positive cash flows remains uncertain due to this type of interest obligation.

Yes. So, the thing with Korev, as with Oracle in fact, but Korev is much smaller than Oracle right now, is that we are seeing a continuous backlog of requests.

But the fear is not in the existence of this accumulation itself, but in their ability to deal with it as quickly as possible, and especially on time, because interest payments are not delayed.

In the last quarter, the value of pending orders exceeded $600 million, meaning it has already doubled. In the next quarter, it is expected to exceed $900 million.

Therefore, the fear does not lie in Koreev's problems themselves, but in problems that some of her partners may face, perhaps unable to pay Koreev's dues on time. This is the source of concern.

Because if the data center is not delivered on time , it means that Korev will not be able to start generating revenue on time, which means that the revenue that is supposed to flow into the company, and therefore the ability to make interest payments , will be delayed, or they will have to raise funds.

Because the market still currently expects Corre's revenues to grow by 150% during the current fiscal year, by another 104% in the next fiscal year, and then by approximately 62-63% in the fiscal year after that.

So, we are definitely talking about a growth company, but it is a debt-ridden company .

If you are a company like Coreweave with high leverage, that is normal and not a flaw in your business model, creating a dynamic that leaves some investors confused and a little worried .

I'm not saying Coreweave will disappear overnight. As you know, I don't think the company will collapse completely. I think if we look at it from a better perspective, this is a company that has been trading at a very high valuation for a long time .

Therefore, the price, although high, may have become easier and closer to the true value of the company.

But certainly, if you are an investor in Corewave, I am not saying you should sell all of your shares, but I think you should understand the pivotal role this plays in their business model.

In addition, I believe Coreref possesses very valuable assets.

Simply put, these companies may not have enough cash flow to support these projects. So, at the moment it seems that she needs to stay for about another year. Staying here simply means providing what is required of her, and then the situation will improve.

Of course, there are always risks, but these risks did not suddenly change. For example, the Core company's hypothesis remained the same for several months.