CoreWeave stock plummeted again on fears Democrats will slow the pace of the artificial-intelligence buildout, but CEO Michael Intrator insists it will be business as normal for the cloud-computing company, regardless of the midterm results.
CoreWeave shares dived 11% to $43.22 in early trading Thursday, adding to Wednesday's 10% drop.
The stock has fallen more than 40% in the past month, as concerns over its debt load have been compounded by fears that victorious Democrat politicians will oppose data-center construction.
Shares of the company's neocloud peers were also falling, with Nebius Group down 15% and IREN dropping 14%.
Eyes are on CoreWeave's multiple data-center projects in Texas. Governor-elect Gina Hinojosa has promised a pause on data-center development to limit impacts on water and power bills.
But CEO Intrator is pushing back on those concerns.
"We currently don't anticipate any impact to CoreWeave's existing customer commitments or associated backlog as a result of shifts in the political landscape," Intrator wrote in a post on LinkedIn. "We look forward to continuing to work with elected leaders from both parties, at every level of government, to strengthen American competitiveness, support our communities, and build the foundation for the next generation of breakthroughs."
CoreWeave is particularly sensitive to delays as its business model is built on a rapid cycle of debt financing, capital expenditures, and sales growth. Put a pause to that flywheel and the concern is that interest expenses will outpace revenue collection.
The company has been hit by soaring yields on its debt, which have touched as high as 16% as investors demand more compensation for the risk of its borrowing. CoreWeave' bonds carry a "B," or highly speculative, credit rating from S&P Global because the company has a high level of debt relative to earnings.
But there are some reasons to be positive. For one thing, Hinojosa and other Democrat politicians haven't said they are outright opposed to data centers -- only that they are calling for stronger guarantees on areas such as electricity costs and water use. Major CoreWeave partner OpenAI on Thursday issued a policy statement promising to cover the full cost of the electricity and infrastructure for its data centers, among other commitments.
Additionally, existing data centers and sites that already have permits could become more valuable if future projects come under question. CoreWeave's Intrator noted the company already has more than 1.5 gigawatts of active power and has a "clear line of sight" on 4.2GW of contracted capacity.
Truist Securities analyst Arvind Ramnani reiterated a price target of $165 on CoreWeave stock in a research note Wednesday.
"Compute remains scarce, driving significant pricing power and a larger portion of prepayments on contracts," wrote Ramnani, noting increased prices can guarantee strong enough margins to more than cover CoreWeave's debt payments, while fueling attractive returns.
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