Jack Gamble on CoreWeave debt
by Freddenver: CoreWeave
Jack Gamble calling CoreWeave a guaranteed zero is the part that sticks, but the debt math is what makes it land. Operating income doesn't cover what they already owe, borrowing costs keep climbing, and the only move left is new debt to pay off the old debt at higher rates. He thinks the bond market is about to shut the door on that, and the backup plan is just flooding the open market with shares forever. Meanwhile the founder is selling while the stock sits down 50%. Gamble's verdict for anyone who bought in: you stepped on a landmine. He also brings up the company's history with the SCC. His call is that none of this survives the next five years, and he points out they've never booked a dollar of profit or gotten any closer to it. lol harsh way to put it but hard to argue with the math.
Transcript (en)
A guaranteed, a guaranteed zero, in my opinion. There is no conceivable way this company survives the next five years. They've never made a dollar in profit. They're not getting closer to profitability. They're getting further from profitability. Their cost of borrowing is going up. They can't service their existing debt with any operating income. They don't have any operating income. So their only hope is to take out new debt to pay their old debt. The new debt will come at a much higher interest rate. The bond market is already getting ready to tell them no. Their alternative would be to endlessly dump shares on the open market, which they just filed to do. They have, I think, a billion dollar at the market offering on standby right now. The founders are continuing to dump stock on a daily basis, whether it's planned or not. I don't care. They're dumping the shares while their stock is down 50% from its highs. I mean, they're voting their wallet. it. I mean, guys, if you bought this company, you bought into a landmine created by a financial firm with a reputation for sketchy behavior, for deliberately sabotaged investments targeting retail investors while they bet against it. You bought what they were selling. A company that was stood up by Jensen Wong, who has a history of run-ins with the SEC going all the way back to 2000, several run-ins with the SEC. You're a bag holder at this point if you're holding this crap, either the debt or the shares. And it's going to...
