Cloud computing startup CoreWeave, which is backed by chipmaker Nvidia (NVDA), reportedly broke some terms of a $7.6 billion loan agreement last year, which led to a series of technical defaults, according to the Financial Times. This comes as the company prepares for a $26 billion Nasdaq (NDAQ) IPO. Interestingly, these defaults were not because of missed payments but rather due to administrative errors. Indeed, the company accidentally used the loan funds to expand into Western Europe, which was against the terms that restricted the loan’s collateral to U.S.-based assets.
However, in December 2024, CoreWeave asked its main lender, Blackstone (BX), to amend the agreement and waive the defaults. The loan was structured through a special purpose vehicle that used GPUs and contracts with large customers as collateral. However, CoreWeave broke the terms by sending money to subsidiaries in the U.K., Spain, and Sweden to purchase GPU servers. As a result, this overstated the number of GPUs eligible as collateral, and the company failed to notify lenders of the default within the required three business days.
Despite the breach, Blackstone did not charge CoreWeave a fee for amending the loan terms since it viewed the situation as an administrative mistake. The agreement was also updated to allow foreign assets to be used as collateral going forward, and lenders have since added roughly $500 million in new funding to CoreWeave. In fact, the company has raised about $12.9 billion in total debt commitments, according to its regulatory filings.
Is NVDA a Good Stock to Buy?
Although you can’t invest in CoreWeave yet, you can invest in Nvidia. When turning to Wall Street, analysts remain bullish on NVDA stock, with a Strong Buy consensus rating based on 39 Buys and three Holds assigned in the past three months. Furthermore, the average NVDA price target of $176.54 per share implies an upside potential of 55.7% from current levels.
