Danny Moses, who helped bet against the housing bubble before the 2008 financial crisis, has compared CoreWeave Inc. (NASDAQ:CRWV) to WeWork, questioning whether the AI cloud provider can turn a profit while carrying enormous financial obligations.
“It’s really like a WeWork,” Moses said on Monday’s episode of The Real Eisman Playbook, hosted by his former colleague Steve Eisman.
Moses cited roughly $51 billion in debt and lease obligations, prompting Eisman to call the figure “frightening.”
The WeWork Problem
Moses said CoreWeave has begun renting computing capacity on shorter terms, potentially creating a mismatch with its long-term debts and leases.
That resembles WeWork’s model of signing long-term office leases while relying on shorter-term rentals to cover its costs.
CoreWeave’s June filing showed approximately $35.1 billion in debt and $16.5 billion in lease liabilities. Its operating leases had an average of 12 years remaining, while the GPUs powering its business face rapid technological change.
Echoes of 2000 and 2008
Moses recalled the dot-com boom, when telecom companies spent billions laying fiber-optic networks in anticipation of soaring internet demand.
“They were right. They were right,” he said of investors who believed the internet would transform the world.
But the spending exceeded what the economics could support.
“The math didn’t work,” Moses said.
He also drew parallels with 2008, when Wall Street financed mortgage lenders and packaged their loans into securities for investors.
Moses pointed to a partnership between Nvidia Corp. (NASDAQ:NVDA) and Wall Street banks to securitize AI infrastructure financing, saying such deals are already starting.
BlackRock Inc. (NYSE:BLK) CEO Larry Fink compared the initiative to the early mortgage-backed securities market, prompting an incredulous reaction from Moses.
“What did you just say?” he recalled thinking.
Wall Street Divided on CoreWeave
CoreWeave’s 2031 bonds yielded 15.58% Tuesday, reflecting mounting concern over its ability to service its debt.
JPMorgan expects CoreWeave’s free cash flow to remain negative until 2030, although it considers banks’ exposures relatively well secured.
Yet Goldman Sachs upgraded the stock to Buy on Monday, arguing investors overestimate its future financing costs.
CoreWeave also reported $103.7 billion in remaining performance obligations at the end of June, representing contracted revenue, not guaranteed profits.
On Polymarket, traders put the chance of CoreWeave announcing bankruptcy by the end of 2027 at 10%, rising to 29% by the end of 2029.
Moses stopped short of predicting bankruptcy, acknowledging he hadn’t analyzed the company closely enough to judge its eventual profitability.
“That’s not a stock I want to own to express my AI theme,” he said.
Image: Shutterstock
Recent Comments