"This model we have seen before!" Big Short trader explains: Why short AI newcomer CoreWeave

*Author: [Bu Shuqing](https://wallstreetcn.com/articles/3784579#from=ios?ivk=1), Wall Street Journal*

Traders who gained fame from the book and movie "The Big Short" are now setting their sights on the AI computing power rental company CoreWeave. **The investment firm Seawolf Capital, co-founded by three "Big Short" traders, has publicly announced a short position on CoreWeave and systematically elaborated on its bearish logic—this company's business model seems familiar, while its capital acquisition ability is the real Achilles' heel.**

Seawolf co-founder Vincent Daniel disclosed in a Substack article that **the firm has established a short position in CoreWeave and compared its business model to several asset rental companies**. He pointed out that the economic lifespan of GPUs may be far shorter than that of oil drilling platforms, aircraft, or shipping equipment, and the competitive chip supply is expanding at an astonishing rate, raising fundamental questions about CoreWeave's moat.

Daniel emphasized that the core logic of this short bet is not a bearish outlook on the overall AI industry but rather a judgment on capital availability and financing costs. He believes that tech companies are competing with the government for financing resources, compounded by a tightening monetary policy cycle. **If CoreWeave cannot continue to finance at low costs, its business model will be difficult to sustain.** CoreWeave's stock price has recently seen a significant decline due to market concerns over its debt issues.

### From a Social Media Post to Systematic Shorting

Seawolf's short position on CoreWeave originated from a rather dramatic opportunity.

Daniel stated that someone previously mocked investors shorting CoreWeave without financial analysis support on the X platform, which prompted the Seawolf team to seriously study the company.

"It was hard to refute this claim, so we decided to take a serious look," Daniel wrote. "**As we dug deeper into CoreWeave's story, we began to realize that its business model looked very familiar.**"

Daniel, along with Seawolf co-founders Danny Moses and Porter Collins, conducted an in-depth study of CoreWeave. CoreWeave's core business is renting high-performance AI computing power primarily based on NVIDIA GPUs, belonging to the so-called "neocloud" sector.

### "We've Seen This Model Before": Comparison with Traditional Asset Rental Companies

Seawolf compared CoreWeave's business model with several traditional asset rental companies, including Transocean, which rents drilling platforms to oil companies, and AerCap Holdings, an aircraft leasing company.

Notably, **Seawolf simultaneously holds positions in both of these companies but clearly states a preference for them over CoreWeave.**

The reason lies in the essential differences between the economic lifespan of assets and supply constraints. Daniel pointed out that Seawolf prefers to lease assets whose underlying supply is structurally constrained and has limited forward order volumes. "While demand for computing power is undoubtedly strong, the forward supply of competitive chip capacity is expanding at an astonishing rate." In contrast, the economic lifespan of GPUs carries greater uncertainty.

### Capital Structure is the Core Risk

On the financial side, Seawolf's concerns are more specific. Daniel noted that CoreWeave's operations require continuous large-scale procurement of high-priced AI chips, making capital consumption extremely intensive.

**"Based on the projected free cash flow gap for 2027 and the current leverage level of the balance sheet (specifically the ratio of tangible common equity to total assets), this situation is daunting,"** Daniel wrote. "To hold this stock, investors must believe that CoreWeave can raise hundreds of billions of incremental capital under favorable conditions—this is not a bet we are willing to make."

He also admitted that Seawolf's analysis of CoreWeave is still in the "early stages."

### Comparison with WeWork and Judgment on the AI Landscape

This is not Seawolf's first public questioning of CoreWeave. Earlier this month, Moses appeared on "The Real Eisman Playbook" alongside another "Big Short" investor, Steve Eisman, comparing CoreWeave to WeWork—a once-prominent Silicon Valley office space unicorn that has now become a cautionary tale for tech startups.

However, Daniel clearly distinguishes this short bet from an overall judgment on the AI industry. He stated that Seawolf's short position on CoreWeave is essentially a bet on capital availability and financing costs: tech companies are competing with the government for financing resources, and the tightening monetary policy cycle further compresses the space for cheap financing.

"If it cannot finance at low costs, or if capital is simply unavailable, then it will be very difficult to navigate this path—this is precisely my judgment on CoreWeave," Daniel told Business Insider.