Coreweave stock has fallen in recent weeks, hitting its lowest level since September 9, as concerns about an AI bubble linger. The company also exited as competition in the industry intensified and investors looked forward to future financial results that would add color to the company’s business.
Shares were trading at $105 ahead of quarterly results, down 32% from this month’s high.
CoreWeave’s earnings are coming soon.
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The main catalyst for CRWV stock this week will be the upcoming earnings release, which will provide more information on the company’s growth, spending, and the completion of the Core Scientific acquisition process.
Analysts believe CoreWeave will post strong numbers as demand for AI solutions continues to surge. Good examples of this are recently signed agreements, such as the $14.2 billion infrastructure partnership with Meta Platforms and the multi-billion dollar partnership with OpenAI.
The company’s contract with OpenAI started at $11.9 billion and has since been expanded by $4 billion. The company also signed deals with companies such as Cohere, Mistral, Novel, and Toyota-owned Woven.
According to the latest results, CoreWeave’s revenue increased 207% year-over-year. Balance of sales increased 86% to $30.1 billion, with adjusted EBITDA of $753 million and margins of 62%.
CoreWeave’s main challenge is that capital expenditures remain high, with the company spending $2.9 billion in the second quarter. The guiding principle was to spend more than $26 billion on data center construction this year.
The company is expected to report third-quarter revenue of $1.26 billion, a significant increase from last year’s outlook, according to data compiled by Yahoo Finance. Analysts also expect revenue for the current quarter to be $1.79 billion, with full-year revenue expected to be $5.26 billion.
CoreWeave’s earnings per share (EPS) is expected to be a loss of 51 cents, worse than the recent loss of $0.42. The company’s EPS numbers have been below analyst expectations for the past few quarters.
Potential risks remain
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There are several potential risks for CoreWeave in the coming months. The first big problem is that competition in the AI data center industry has increased in the past few months, with companies like IREN, Terawulf, Bitfarm, and Nebius entering the industry.
Nebius recently won a $17.4 billion AI infrastructure contract with Microsoft, and IREN reached a $9.7 deal with Microsoft. TeraWulf has signed a major deal with Fluidstack, a Google-backed company.
As a result, the company may have trouble finding other large customers in the future.
Another risk is the lingering fear that the AI bubble will soon burst. Such a move could lead to spending cuts by large companies in the U.S. and other countries.
Additionally, the company faces financing risks and pressure from short sellers. The short interest outstanding is 29.4 million shares, and the short interest is approximately 10.40%.
Coreweave stock price analysis
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CRWV Stock Price Chart |Source: TradingView
The 12-hour chart shows that CoreWeave’s stock price has fallen over the past few days, rising from an October high of $152 to a current high of $104. It fell below the 50% Fibonacci retracement level and the 50-period exponential moving average (EMA).
Therefore, the stock could see a bearish breakout in the coming days. If that happens, the next major level to watch will be the August low of this year at $84.70. The bearish outlook will be invalidated if the pair breaks above the 50-period moving average of $124.
