CoreWeave Stock Falls Below $80 as Debt and AI Risks Build

CoreWeave stock remained under pressure on Sept. 17 as investors weighed high financing needs, elevated short interest and uncertainty around the pace of artificial intelligence infrastructure spending.

CRWV closed at $79.88, down 4.16% for the session. The stock is now roughly 48% below its 52-week high of $153.20.

The decline came despite rapid revenue growth and a large contracted backlog. However, CoreWeave’s capital-intensive model continues to draw scrutiny as debt rises and the AI industry faces new questions around spending, regulation and safety.

CoreWeave Stock Falls as AI Concerns Rise

CRWV stock continued falling this week as top executives started to warn about the dangers of the artificial intelligence (AI) industry. The crisis has been brewing for a while, but it continued escalating last week when an Anthropic employee resigned, warning that the industry would lead to human extinction.

Top leaders in the AI industry, including those from companies like SpaceX, OpenAI, and Anthropic also chimed in and warned that the industry needed to slow down to avoid major negative impacts.

Some analysts believe that CoreWeave is one of the most exposed companies if the AI industry slows down. That is because it has inked some of the biggest contracts, including with companies like Microsoft, Anthropic, and OpenAI. In the last quarterly results, the company revealed that it had over $104.5 billion in revenue backlog.

CoreWeave is Heavily Shorted as Concerns Remain

CoreWeave is one of the most heavily shorted companies in the industry. Seeking Alpha data shows that the company has a short interest of 12.1%, a sign that many investors expect it to continue falling.

There are several potential reasons for the steady short interest. One of them is that some investors believe that we are in an AI bubble that may burst over time. Some prominent people like Ray Dalio and Michael Burry have warned about this bubble issue. Burry has moved forward and placed short trades on some notable AI companies.

Further, investors are worried about the rising cost of doing business as the prices of key inputs like servers, GPUs, and storage devices continue rising. This surge has benefited top companies in the industry, such as Dell and HPE.

CoreWeave is also planning to spend more money in capital expenditure than initially expected. Earlier this year, its plan was to spend between $30 billion and $35 billion this year. In the last earnings report, it boosted the goal to between $35 billion and $39 billion.

The soaring capex has pushed it to boost its debt over time. Its total debt has moved from less than $4 billion last year to $27 billion today. As such, it will need to raise more money, possibly through share offerings in the future.

On the positive side, the company continues its strong growth trajectory. Analysts expect its annual revenue to jump 151% this year to $12.90 billion, then to a whopping $26.3 billion next year. This revenue growth will continue if the AI boom continues.

CoreWeave Stock Price Technical Analysis

The daily chart suggests that the CRWV stock may be on the cusp of a strong bearish breakdown. That’s because it has slowly formed a head-and-shoulders pattern, one of the riskiest patterns in technical analysis. This pattern consists of a head, which, in this case, is at $ 138.70. It also has two shoulders and a neckline.

The stock has dropped below the 50-day moving average and is slightly above the neckline at $64.8. Therefore, this pattern, together with the moving averages, point to more downside in the coming days. A move below the neckline will point to more downside towards $50. On the other hand, a move above the resistance at $100 will invalidate the bearish outlook.

This article is for informational purposes only and does not constitute financial or investment advice. Analyst forecasts, technical patterns and short-interest data do not guarantee future stock performance.