CoreWeave, Inc. (CRWV) shares plummeted 5.12% in pre-market trading on Tuesday, as investors braced for the company's second-quarter earnings report due after the market close. The sharp decline comes amid growing concerns over the AI cloud vendor's business model and valuation.
The stock's drop reflects increasing investor caution ahead of CoreWeave's earnings release, which will be only its second report since going public in March. Wall Street expects an adjusted loss of 23 cents per share on revenue of $1.08 billion. While CoreWeave has seen its shares surge by 139% over the past three months, recent weeks have brought heightened scrutiny of the company's rapid growth and financial position.
Analysts have raised questions about CoreWeave's ability to fund its ambitious expansion plans. The company previously announced capital expenditures of $20-23 billion for this year, but has only secured $5 billion in debt financing so far. This funding gap, combined with CoreWeave's substantial debt load and interest expenses, has led some investors to reassess the stock's valuation.
Adding to the pressure, CoreWeave faces an upcoming lockup expiration that could potentially flood the market with additional shares. While the exact date remains uncertain, some analysts suggest it could occur as early as August 15, potentially freeing up 83% of Class A shares for trading.
As CoreWeave prepares to report its quarterly results, investors will be closely watching for updates on the company's growth trajectory, capital expenditure plans, and ability to navigate the competitive AI infrastructure market. The stock's performance in the coming days may hinge on management's ability to address these concerns and demonstrate a clear path to profitability.
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