Backblaze stock fell 59% to $8.34 as its $335 million CoreWeave deal becomes a credit bet
Backblaze's best quarter in years came attached to the one AI company Big Short traders are now shorting. The 59% collapse is less a verdict on storage than a credit call on CoreWeave, and the Q3 report on November 2 is where it gets tested.
Vincent Jiang · 2 min read
In August, Backblaze+7.45% — Backblaze, up 7.45 percent today, the San Francisco cloud-storage company, told Wall Street its AI moment had arrived: a $335 million, five-plus-year storage deal with neocloud CoreWeave+6.90% — CoreWeave, up 6.90 percent today, 34% growth in its B2 cloud storage business, and a second consecutive guidance raise 1. The stock hit $23.99 1. It now trades at $8.34, a 59% collapse, and bears have deepened to about 43% of sentiment readings from 18% before that report 1. Nothing about the storage business changed. The counterparty did.
The shorts came for the anchor customer
Seawolf Capital, the firm founded by Danny Moses, Vincent Daniel and Porter Collins, the traders made famous by "The Big Short," disclosed on Friday that it is short CoreWeave, the GPU-leasing neocloud that is Backblaze's anchor AI customer. Co-founder Daniel likened the model to WeWork and rig lessors, and said CoreWeave must raise "tens of billions of dollars in incremental capital on accretive terms," a bet Seawolf will not take, citing projected 2027 free-cash-flow deficits and balance-sheet leverage 2.
The deal pays late, and the market knows it
That is the repricing logic. Backblaze books $22 million of the CoreWeave deal as warrant-related contra-revenue, the contract's minimum commitment does not start until around mid-2027, and the company funds capex at 55% to 65% of revenue through capital leases while guiding gross margin, 63% last quarter, down a few hundred basis points as depreciation lands before revenue 1. Remaining performance obligations, the contracted backlog, jumped about $320 million in one quarter on the strength of that same deal 1. The market is now deciding whether that paper pays.
B2 growth accelerated for two quarters; Q3 guidance asks for a third
- B2 revenue growth, YoY %
- Estimate
Data
| B2 revenue growth, YoY % | |
|---|---|
| Q1 26 | 12 |
| Q2 26 | 18 |
| Q3 26E (estimate) | 20 |
November 2 is the reading
Consensus expects revenue of $44.6 million, up about 20%, with non-GAAP EPS of 4 cents against a 9-cent Whisper 1 3. An in-line quarter with fuzzy answers on the CoreWeave ramp keeps the skeptics in charge. Owning Backblaze here means underwriting CoreWeave's credit, six days before the reading.
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