After earlier downgrade, CRWV's 14.5% fall to $66 led me to upgrade it to buy on Oct 14, 2026, as risk-reward is more attractive; DCF fair value about $81. Debt over $51B, cost of capital over 14%, free cash flow negative until 2029, so conviction low amid uncertainty.

Shares in Korwef fell by about 15% today on news of increased debt interest expenses. Investors are increasingly concerned about debt-laden AI companies like Korwef, as their debt balances grow and interest rates rise , increasing the cost of repaying those debts .

This is precisely what investors are asking me about regarding the collapse of the "Korowave" stock. Therefore, I will discuss in detail my opinion on this situation. Investors are also asking whether this crash represents a buying opportunity, and I will answer that question as well in this video.

On Tuesday, venture capitalist Chamath Palihapitiya posted a chart showing that the yield on Korweef's $1.25 billion bond due in 2032 touched 15% and then closed at a new high of 14.5%.

This is roughly the debt rate I had already calculated for Korweef , so it was not surprising to me. It should be noted that the company's actual debt expenditure or interest expenditure is less than the return to maturity on that debt.

So, for interest expenses, let's say they issue new debt today at 14.5%, it will actually cost the company about 75% of that, maybe a little less or a little more , depending on the exact calculations of their accountants because they get a discount on that debt.

Overall, this is not a very alarming figure or a sudden jump in the company's interest expenses . It was relatively high throughout its operation.

In fact, the company’s interest expense, excluding movements in 10-year Treasury bonds —that is, if you measure the difference between the Corweave interest rate and the 10- year US Treasury rate—has likely been narrowing in recent years, as the company’s revenues and profitability have grown, it has signed more customers, and sales have increased.

In fact, according to Wall Street analysts who follow Korwef, they estimate that the company will grow by 151% in 2026 with revenues rising to $ 12.87 billion, then by another 104% in 2027 with revenues rising to $26.3 billion, and then by another 63% in 2028 with revenues rising to $ 42.8 billion.

Remember that in 2025, the company generated $5.1 billion. So, in about 3 years , their revenues will have increased eightfold. This is a larger base of sales and cash flow that the company receives, and they can use it to pay interest expenses .

When the company becomes positive cash flow, they can use that flow to pay off these debts and achieve greater balance in their balance sheet .

Therefore, according to the latest update, CoreWave has more than $51 billion in long- term debt on its balance sheet , which is a significant increase. Remember that in January 2025, they had only $10 billion of debt on their balance sheet .

The reason I'm showing this chart after the revenue chart is that the company is funding the construction of new data centers to generate that revenue , and it's funding that primarily through debt.

They borrow money to build these data centers , and once they are built, they start generating revenue. There are customers waiting in line. However, in order to generate those revenues, they need to borrow money.

They need cash to build those data centers . This is the business model.

For this reason, during my coverage of CoreWave, I emphasized that this investment should only be considered by investors with a very high risk tolerance . It is one of the riskiest stocks you can invest in on the market.

It is comparable to quantum computing stocks. It's slightly less risky than quantum computing stocks, I would say, but it's approaching the highest risk levels you can find in the market .

Based on these new developments, I have updated CoreWave's cost of debt, and calculated the cost of debt after deducting tax at 12.5%. Overall, CoreWave's weighted average cost of capital is over 14%.

Therefore, I am applying a higher-than-usual weighted cost of capital , one of the highest, to CoreWave because of this risky situation. I also expect three consecutive years of negative cash flow.

I estimate a shortfall of $28.5 billion in 2026, $32 billion in 2027, and $22 billion in 2028 in terms of CoreWave's free cash flow as it invests heavily to build these new revenue-generating centers.

I don't expect the company to have positive free cash flow until 2029, when it will generate $5 billion in free cash flow, and that number will increase thereafter.

In general, when I calculate all the free cash flow estimates from today to the long term, and discount those cash flows using my discount rate which includes the cost of debt and the cost of equity, I come to the conclusion that the fair value of this stock is about $81 compared to the current market price of $66 after today's decline of 14.5%.

So, earlier this year, I downgraded Coreweave stock after its price had risen significantly. I informed investors that it did not appear to be a great buying opportunity because the risk- reward ratio was unattractive at the time.

However, after today's big drop and recent declines in general, Coreweave stock now looks like a more attractive buying opportunity . So, I will be upgrading Coreweave's rating to "buy" today, October 14, 2026.

You can see that I'm upgrading Coreweave's rating to a buy opportunity, but I have a relatively low level of conviction and a low level of confidence in that rating, given there's a lot of uncertainty about how much cash flow the business will generate in the coming years.

So, with that in mind, I feel less confident in this ranking.