What's Next for CoreWeave?
It’s been a rocky month for CoreWeave (Nasdaq: CRWV), prompting questions about whether the AI cloud infrastructure supplier can keep pace with its towering share price. It must sustain its infrastructure buildout fast enough to serve a growing backlog. At the same time, CoreWeave must adjust to life outside the bubble that inflated its stock over the past few months.
Despite Q2 revenue growth of 207% to $1.2 billion, the AI cloud provider’s stock has fallen over 38% following the August 12 report. The expiration of a share lockup on August 15 seemed to further distress the shares, as insiders sold off large portions of their stock.
In short, investor confidence in CoreWeave seems to wax and wane, and lately mostly wane. Since the company’s IPO in March 28 when it closed at $40 per share, the stock soared to a high of $184 in June, only to fall steadily to yesterday’s close of $92.89.
CoreWeave’s Lopsided Model
Investor discomfort appears to center on CoreWeave’s lopsided model: Because it doesn't yet make money, the company chews through enormous funds to establish and equip its 33-and-counting datacenters. Debts are mounting. In its Q2 earnings report, CoreWeave posted a net loss of $291 million, operating expenses of $1.2 billion, debt of $3.6 billion. Then there’s capex: For Q2, that came in at $2.5 billion, more than double the company’s revenues. For the year, the company anticipates capex spending to be $20 billion to $23 billion.
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