Some autistic people like trains, some like videogames. My autistic hyperfixation is CoreWeave's financials. You can keep your Nebius and TeraWulf, the only Neo Cloud I care about is one that has massive collateralised debt obligations and a floor price for DRAM that's just hit critical mass. It's the reason I shorted it twice. And would short them in August, but can no longer do that.
The company is now shorting itself.
https://www.tradingview.com/news/reuters.com,2026:newsml_L6N43G1EG:0-ai-cloud-company-coreweave-explores-wall-street-playbook-to-hedge-memory-chip-price-risk/
Okay.
So.
This actually solves it for them. It's perfect. It's circular financing inside more circular financing.
So my thesis, that remains correct, is that CoreWeave cannot pay for DRAM with the prices that were contracted.
As competitors move into the market, including even Meta for some reason despite being CoreWeave's biggest customers, they have access to better prices because they didn't sign ironclad contracts and can buy cheap, next generation memory at spot prices.
(Kind of. Memory prices are up as are SSD's even though Nvidia keeps putting out more powerful chips. Mostly this is a Jevon's Paradox of whilst technological progress increases the efficiency of a resource, the rate of consumption increases.)
The part that left me scratching my head is “Why are CoreWeave going to make a custom-built derivative to have Puts on Sandisk and Micron when Micron and Sandisk are the people they have contracts with? Why do Puts when it's up?”
Oh.
Because they know they're going to crash and don't care. It's to mitigate the collapse.
They know Micron and Sandisk and Nvidia are overvalued so they're asking for specialised Put options when the market corrects which will allow them to keep buying and keep their balance sheets steadily bleeding rather than just burning up.
I didn't plan for this and this was never part of my Bear Thesis. “The company goes bankrupt” seemed more likely than “The company creates a nested doll of circular financing, shorting the companies it's buying from and using the difference to make up money whilst eventually dying to what I can only assume would be prolonged theta decay.”
Because Put options aren't free. You can't just say “I think Starbucks will go to zero in 2100” and just wait then cash out if it falls apart in 2075. You have to pay in order to keep your contract afloat.
Which leads me to think maybe they're expecting this to be fairly quick.
Here's the step by step.
Step 1. The demand for AI slows down or there's an oversupply of hardware.
Step 2. The spot price of memory plummets.
Step 3. Micron and Sandisk see their stock prices drop because their margins are getting wrecked.
Step 4. CoreWeave's Put options become profitable, making them money on Wall Street.
Here's the catch. In order to reach Step 2 and Step 3, CoreWeave's entire business needs to already be on fire.
It is like setting your house on fire and then calling the insurance company to try and file a claim whilst bits of burning debris are falling around you and you're trying to pretend to the insurer on the phone that it's just the kettle or something.
It becomes even more stupid when you look at CoreWeave's relationship to Nvidia.
Nvidia is a major investor in CoreWeave
CoreWeave uses debt to buy massive amounts of chips from Nvidia which grossly inflate their revenues.
Nvidia is highly correlated to the semiconductor market and memory makers like Micron.
If CoreWeave shorts Micron to protect itself, and they'll have to, there's no other players, they are betting against the forces that fuel Nvidia's valuation which is the only thing that keeps CoreWeave afloat.
It's insane. But seems less so when you consider how bizarre the business is, how Meta just started Meta Compute going from its lifeblood customer to direct competitor and will probably kill it. It has spare compute out the wazoo, which it can sell at a massively undercut on price because whilst CoreWeave makes no money, Facebook and Instagram make bank.
So this is how it ends.
Not with a bang.
But by shooting yourself directly in the dick for no understandable reason.