CoreWeave Crashes 46% After Lockup--Is This the AI Bargain of the Year or a Falling Knife?
Warning! GuruFocus has detected 5 Warning Signs with CRWV.
The selloff could create both risk and opportunity. CoreWeave now trades at a roughly $49 billion market cap, down from a June high of $88 billion. Its free floatpreviously under 15%could expand significantly as insiders begin selling. That's likely what spooked the market, according to Roundhill CEO Dave Mazza, who called it a challenging, even confusing setup. Citi's Tyler Radke echoed that sentiment, warning of short-term pressure but suggesting that a more liquid float might attract new buyers. Meanwhile, Nvidia (NASDAQ:NVDA)CoreWeave's key AI chip supplierisn't going anywhere. It actually increased its stake in Q2 to 6.5%, now worth about $2.4 billion.
The long-term bull case hasn't vanished. CoreWeave is still spending aggressivelyup to $23 billion this yearto meet rising AI demand, and counts Microsoft as its largest customer. But execution risk is climbing, especially with its all-stock acquisition of Core Scientific looming. Hedge funds like Magnetar and Coatue may opt to ease out slowly to avoid triggering further panic. D.A. Davidson's Gil Luria has a $36 price target, implying over 60% downside from recent levels. Whether this marks a healthy reset or the beginning of a deeper unwind depends on who shows up to buyif anyone does.
This article first appeared on GuruFocus.
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