The move: CoreWeave stock fell as much as 12% on Friday. The AI infrastructure stock has battled high volatility lately, though it's up about 19% year to date.
Why: CoreWeave's decline on Friday comes after a report from Business Insider that said Blue Owl Capital was unable to arrange debt financing for a data center it's co-developing that is expected to be occupied by CoreWeave.
Business Insider's Dan Geiger reports that a debt arranger for major data center deals said that the project, located in Pennsylvania, failed to attract interest because lenders are reluctant to add exposure to AI firms with below-investment-grade credit. CoreWeave debt is rated B+ by S&P Global Ratings, several notches below investment grade.
What it means: Despite being backed by Nvidia, CoreWeave has faced skepticism from finance pros who have wondered about the sustainability of the business model of renting out compute to AI customers.
The company's high debt-to-equity ratio and its AI-dependent business model have been red flags for some investors, particularly as AI enthusiasm has waned somewhat in the last six months.
In October, CoreWeave's attempted merger with Core Scientific fell through after Trip Miller, the founder of the investment firm Gullane Capital and Core Scientific's third-largest shareholder, announced he would vote against it.
Famed short-seller Jim Chanos has also raised concerns about CoreWeave, highlighting problems he sees with its financials and profitability, and warning investors against owning data center stocks.
Blue Owl, meanwhile, was already in the spotlight this week for reportedly halting redemptions on one of its private credit funds offered to retail investors.
