How the Life Drain effect calculates if I fail CON save?

Question

My character was hit by a Wraith's Life Drain, and it was a critical hit. My HP was at 29/33, and I took 32 necrotic damage.

How order of the max HP reduction should be calculated?

My interpretation:

1. 29/33 HP
2. Takes 32 necrotic dmg, fail CON save
3. -3/1 HP
4. Dies

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My DM interpretation

1. 29/33 HP
2. Takes 32 necrotic dmg, fail CON save
3. -3/33 HP, die? No.
4. 0/1 HP, unconscious.

Which interpretation is right?