Analysis: Oversold Due to Lock-Up Expiration?

1. Lock-Up Expiration and Immediate Market Reaction

A substantial 84% of Class A shares—previously held by insiders and early backers—became tradable on August 15, 2025, releasing a significant portion of CoreWeave's float for the first time since its March IPO.

This influx of shares triggered heavy block selling through Morgan Stanley, Goldman Sachs, and JPMorgan, with some blocks as large as 8 million shares—generating over $1 billion in insider sales.

Compounding the pressure, CoreWeave reported wider-than-expected losses in Q2—approximately $290–291 million—and rapidly increasing operating expenses (~$1.19–1.2 billion).

2. Is It Oversold?

Though the stock has pulled back—dropping some 35% over two days—this move appears fundamentally driven rather than an irrational sell-off. The combination of increased float, weak earnings, and ballooning expenses is a valid basis for caution.

Historically, IPO lock-up expirations tend to lead to modest further declines over the following month—about 2.4% on average, and closer to 0.5% for larger-cap companies like CoreWeave (now valued around $57 billion).

3. Is It a Buy Under $100?

The answer depends on your time horizon and risk appetite:

** Potential positives:**

CoreWeave’s Q2 revenue surged to ~$1.2 billion, more than triple year-over-year, driven by strong demand from AI workloads.

Key relationships remain strong: major customers (e.g., Microsoft, Meta, OpenAI) continue investing heavily, and Nvidia remains a strategic partner holding both a stake and GPU supply alignment.

Analysts like JPMorgan raised their target to $135, citing long-term AI demand tailwinds.

The lock-up expiration, while disruptive, may improve liquidity over time and reduce extreme volatility.

** Risks to consider:**

Rapidly rising operating expenses, steep debt load (~$8–11 billion), and large-scale capital expenditures (Q2 CapEx hit ~$2.9 billion) weigh heavily.

Valuation remains elevated—currently trading at ~36× forward operating income, above even Nvidia's multiple of 31×.

Investor sentiment remains cautious: fewer than 25% of analysts rate it a “buy,” and most hold neutral ratings.

The company is still burning through cash to fund its expansion and acquisitions, like the $9 billion all-stock deal with Core Scientific, which faces shareholder pushback.

4. Strategic Entry Considerations

If bullish on AI infrastructure growth, a disciplined approach might include averaging in gradually—possibly waiting to see if the stock stabilizes toward the mid-$90s or consolidates above $100 with lower volatility.

Consider watching for improved sentiment, debt metrics, or operational efficiency updates in upcoming earnings or investor communications.

Set stop-loss or target thresholds to manage downside, given the heightened volatility post-lock-up.

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Summary Table

Question Insight

Oversold due to lock-up? Not necessarily oversold—decline reflects valid fundamental pressures.

Is sub-$100 a buy? Potential tactical entry, but warrants caution, gradual exposure, and clear risk management.

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Disclaimer: This analysis reflects conditions as of August 16, 2025, and is not investment advice. Please evaluate based on your own strategy, risk tolerance, and time horizon.