TradingKey - Cathie Wood Buys More on the Dip, but CoreWeave Still Breaks Below $60, Facing Potential Further Downside of Around 16%.
On October 20, Eastern Time, CoreWeave (CRWV) stock continued to face downward pressure, falling by about 2.7% in pre-market trading today to forcefully break below the major psychological level of $60 again. It can be seen that even though Cathie Wood's ARK Invest funds frequently bought the dip, it was still difficult to resist the selling pressure from long liquidations.
According to disclosures from Ark Invest Tracker, Cathie Wood's ARK Invest spent over $8 million yesterday to buy over 13 shares of CoreWeave stock. After continuous bottom-fishing over the past week or so, the total number of CoreWeave shares held by ARK's funds has rapidly accumulated to break through the 1.2 million–1.5 million share mark, accounting for approximately 0.61%–0.75% of the market's public float.
Recently, hit by a debt crisis, CoreWeave's stock price has continued to fall. Notably, the yield on CoreWeave's high-yield unsecured bonds in the open market spiked sharply on October 14 to distress levels of 15%–16% typical of junk bonds, and the company's 5-year CDS surged above 1,000 basis points (bps), with market pricing implying a greater than 60% probability of default or debt restructuring over the next 5 years.
For heavily indebted data center operators like CoreWeave, which rely heavily on public capital markets and bond issuances for refinancing, prolonged high interest rates mean future borrowing costs will surge further, prompting market-wide capital to begin concentrated deleveraging across the high-debt AI computing sector. Only when its high-yield bond yields retreat significantly can the structural downside risk brought by this debt panic be truly resolved.
However, if the crisis is not resolved, CoreWeave's stock price may continue to decline. Extending downward using the current daily Average True Range (ATR), the first volatility support zone after falling below $60 lies around $55, which also coincides with the lowest 12-month target price given by Wall Street's most pessimistic investment bank. Some value investment capital and institutional quantitative models are expected to attempt establishing a long defensive line here.
CoreWeave stock price chart, Source: TradingView
If selling pressure continues to expand, the 2x ATR downside extension target lies near $50, which is both a strong round-number psychological level and a historical consolidation platform for CoreWeave prior to its breakout in the first half of 2025. A pullback to this range could accumulate high-intensity rebound energy.
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