--- title: "Backblaze stock fell 59% to $8.34 as its $335 million CoreWeave deal becomes a credit bet" description: "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." publisher: "The Inference" section: "Data Center" published: 2026-10-27T13:36:59.957Z modified: 2026-10-27T13:36:59.957Z canonical: https://theinference.org/article/backblaze-stock-fell-59-to-8-34-as-its-335-million-coreweave-deal-becomes-a-credit-bet language: en keywords: "Data Center, Cloud Storage, Backblaze, CoreWeave, Short Sellers, Stock Moves" --- # 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. In August, [Backblaze](https://theinference.org/markets/companies/backblaze), 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](https://theinference.org/markets/companies/coreweave), 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. ![Backblaze employees at its Nasdaq public listing](https://storage.googleapis.com/theinference-public/img/fdbda235b7382079.webp) *Backblaze marked its Nasdaq public listing in 2021; the stock now trades at $8.34, down 59% from its August post-deal high. (Courtesy of Backblaze)* ## 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](https://www.businessinsider.com/big-short-traders-bearish-ai-bet-coreweave-crwv-nvda-2026-10), 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. *Chart: **B2 growth accelerated for two quarters; Q3 guidance asks for a third** Column chart showing B2 revenue growth accelerating: 12 percent year over year in Q1 2026, 18 percent in Q2 2026 and about 20 percent expected in Q3 2026.* *Year-over-year growth in B2 cloud storage revenue, percent. Q1 and Q2 reported; Q3 is consensus-implied revenue growth of about 20 percent. Sources: Earnings Whispers via Finviz, 26 Oct 2026 [1]. [1]* ## November 2 is the reading [Consensus expects revenue](https://finviz.com/news/407884/backblaze-must-prove-its-ai-pivot-is-real-after-a-59-post-earnings-collapse) 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. ## Takeaway The 59% collapse in Backblaze shares is not a verdict on its storage business, which is accelerating; it is the market pricing the credit risk of CoreWeave, its anchor AI customer whose minimum commitments do not start until mid-2027. Q3 results on November 2 are where the call gets tested. ## Sources 1. [Earnings Whispers via Finviz, Backblaze Must Prove Its AI Pivot Is Real After A 59% Post-Earnings Collapse, 26 October 2026](https://finviz.com/news/407884/backblaze-must-prove-its-ai-pivot-is-real-after-a-59-post-earnings-collapse) 2. [Business Insider, 'We've seen this model before': 'The Big Short' traders unpack their bet against CoreWeave, 27 October 2026](https://www.businessinsider.com/big-short-traders-bearish-ai-bet-coreweave-crwv-nvda-2026-10) 3. [Finviz, BLZE stock quote and financials page, accessed 27 October 2026](https://finviz.com/quote.ashx?t=BLZE) --- Backblaze stock fell 59% to $8.34 as its $335 million CoreWeave deal becomes a credit bet — The Inference. Canonical: https://theinference.org/article/backblaze-stock-fell-59-to-8-34-as-its-335-million-coreweave-deal-becomes-a-credit-bet