CoreWeave faces a pivotal test as it prepares to report third-quarter financial results on Tuesday, with markets closely monitoring the neocloud company's ability to finance its massive artificial intelligence infrastructure buildout. The company reported a revenue backlog of $104.2 billion in the second quarter and carries approximately $35 billion in debt as of June 30. This debt load has contributed to a significant rise in the company's leverage, with its debt-to-equity ratio climbing to 702% from nearly 291% a year ago.
Investor confidence has faced pressure as CoreWeave's stock has declined roughly 40% over the past month. On Tuesday, the yield on its 9.75% bond due in 2031 stood at 15.5%, following a jump to 16.7% last Thursday. Additionally, the company's credit default swap spread, a measure of perceived credit risk, reached approximately 1,152 basis points on Tuesday, rising from an October peak of 1,278 basis points.
In August, CoreWeave guided for third-quarter revenue between $3.4 billion and $3.6 billion, with anticipated capital expenditures between $11.5 billion and $13.5 billion. The company expects to reach 1.85 gigawatts in active power by the end of the year. However, Wells Fargo analyst Michael Turrin noted that capital expenditures could reach $66 billion by 2027, potentially requiring at least $25 billion in additional debt to fund capacity additions of 1.5 gigawatts.
