Traders made famous by the book and film "The Big Short" are now turning their attention to AI computing rental company CoreWeave. Seawolf Capital, an investment firm co-founded by three of these "big short" traders, has publicly announced a short position in CoreWeave, Inc. (NASDAQ: CRWV) and laid out its bearish thesis in detail — the company's business model looks familiar, and its ability to access capital is the real fatal weakness.
Seawolf co-founder Vincent Daniel disclosed in a Substack article that the firm has established a short position in CoreWeave, Inc. (NASDAQ: CRWV) and compared its business model to several asset leasing companies. He pointed out that the economic life of GPUs may fall far short of that of oil rigs, aircraft, or shipping equipment, while competing chip supply is expanding at an astonishing pace, raising fundamental questions about CoreWeave's moat.
Daniel stressed that the core logic behind this short bet is not a bearish view on the AI industry as a whole, but rather a judgment on capital availability and financing costs. He believes that tech companies are competing with governments for financing resources, and combined with a tightening monetary policy cycle, CoreWeave's business model will be difficult to sustain if it cannot continuously raise funds at low cost. CoreWeave's share price has recently fallen sharply amid market concerns over its debt problems.
From a social media post to a systematic short
Seawolf's short position in CoreWeave, Inc. (NASDAQ: CRWV) originated from a rather dramatic moment.
Daniel said someone on X had mocked investors who shorted CoreWeave, Inc. (NASDAQ: CRWV) without solid financial analysis, which instead prompted the Seawolf team to seriously study the company.
"It was hard to argue with that, so we decided to take a serious look," Daniel wrote. "As we dug deeper into the CoreWeave story, we began to realize its business model looked very familiar."
Daniel, along with Seawolf co-founders Danny Moses and Porter Collins, conducted in-depth research on CoreWeave, Inc. (NASDAQ: CRWV). CoreWeave's core business is renting high-performance AI computing power centered on Nvidia GPUs, part of the so-called "neocloud" segment.
"We've seen this model before": comparisons with traditional asset leasing companies
Seawolf compared CoreWeave, Inc.'s (NASDAQ: CRWV) business model with several traditional asset leasing companies, including Transocean, which leases drilling rigs to oil companies, and aircraft equipment leasing company AerCap Holdings.
Notably, Seawolf holds positions in both of those companies but made clear it prefers them over CoreWeave, Inc. (NASDAQ: CRWV).
The reason lies in fundamental differences in the economic life of assets and supply constraints. Daniel noted that Seawolf prefers leasing assets whose underlying supply is structurally constrained and whose forward order books are limited. "While computing demand is undoubtedly strong, forward supply from competing chip capacity is expanding at an astonishing rate." By contrast, the economic life of GPUs is far more uncertain.
Capital structure is the core risk
On the financial side, Seawolf's concerns are more specific. Daniel pointed out that CoreWeave, Inc.'s (NASDAQ: CRWV) operations require continuous large-scale purchases of expensive AI chips, making capital consumption extremely intensive.
"Based on the projected free cash flow shortfall in 2027 and the leverage level of the current balance sheet — specifically, the ratio of tangible common equity to total assets — the situation is daunting," Daniel wrote. "To hold this stock, investors must believe that CoreWeave can raise tens of billions of dollars in incremental capital on accretive terms — that is not a bet we are willing to make."
He also acknowledged that Seawolf's analysis of CoreWeave, Inc. (NASDAQ: CRWV) is still at an "early stage."
The WeWork comparison, and the broader AI call
This is not the first time Seawolf has publicly questioned CoreWeave, Inc. (NASDAQ: CRWV). Earlier this month, Moses appeared on "The Real Eisman Playbook" alongside fellow "big short" investor Steve Eisman, comparing CoreWeave to WeWork — the former Silicon Valley office-space unicorn that has become a cautionary tale for tech start-ups.
However, Daniel clearly distinguished this short bet from a judgment on the AI industry as a whole. He said Seawolf's CoreWeave, Inc. (NASDAQ: CRWV) short is essentially a bet on capital availability and financing costs: tech companies are competing with governments for financing resources, and a tightening monetary policy cycle further squeezes the room for cheap financing.
"If it cannot raise money at a low cost, or if capital simply isn't available, then getting through this stretch will be very difficult — that is exactly the judgment I have made about CoreWeave," Daniel told Business Insider.
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