CoreWeave Stock Suffers $40 Billion Wipeout After Earnings: Buy the Dip?

Key Insights:

• CoreWeave stock price plunged after releasing its strong financial results.
• Investors are concerned about its losses and capital expenditure.
• The stock will likely be volatile and then rebound later this year.

CoreWeave stock price has plummeted recently, leading to a $40 billion wipeout as its market capitalization has crashed from $88 billion in June to $48 billion today. CRWV was trading at $95.92, its lowest level since May 21. So, is it safe to buy the dip or sell the rip?

CoreWeave Stock Price Tanked After Earnings

CoreWeave has become one of the fastest-growing American companies as demand for artificial intelligence (AI) computing power surges. Its services are essential as the company operates 33 data centers, which are then used by some of the top players in the AI space, including OpenAI, the creator of ChatGPT.

CoreWeave’s growth is demonstrated by its annual revenue figures. It made $15.8 million in 2022, a figure that grew to $1.9 billion in 2024 as it pivoted from Bitcoin mining to the AI data center space.

CoreWeave stock price tanked this week after it published its financial results, which showed that its business was growing. Its revenue rose by 207% in Q2 to $1.2 billion, which was $700 million short of what it made in the four quarters of 2024.

Another important data point was that its revenue backlog surged by 86% to $30.1 billion. Most of this backlog, which came from OpenAI, refers to the total value of future revenue expected from committed customer contracts.

The CoreWeave stock price crashed because its growth momentum is coming at a great cost, while its losses are substantial. It recorded a net loss of $290 million, an improvement from the $323 million it lost in the same period last year.

At the same time, the company is spending huge sums of money to build its data center and acquire GPUs and other equipment. It spent $2.9 billion in capital expenditure in the second quarter, and now expects to spend $20-$23 billion this year.

These are huge numbers considering that the company ended the second quarter with current assets of $3.9 billion. It had $1.15 billion in cash and equivalents, meaning that it will need to raise capital this year. It recently raised $2.6 billion in debt to fund its capex.

Is it Safe to Buy CRWV Stock?

The AI industry is expected to continue growing in the next few years, with McKinsey predicting a $7 trillion opportunity by 2030. This growth will benefit many companies, including infrastructure providers like CoreWeave.

CoreWeave’s huge capex is also understandable as it seeks to grow its market share in the US and other countries. It is equivalent to how Tesla spent billions of dollars building its company before it broke even.

Most importantly, CoreWeave’s business has demonstrated that it will scale, with the management expecting its annual revenue to be between $5.1 billion and $5.5 billion this year. Analysts predict that its revenue will reach $12 billion by 2026, representing a 128% annual growth rate.

CoreWeave stock price will likely experience volatility soon after the lockup expiry ended. This means that its top insiders are now free to start selling shares. In the long term, however, CRWV stock price will likely rebound as investors focus on its growth.

CoreWeave Share Price Analysis

The 12-hour chart shows that the CRWV stock price has plummeted in the past few weeks, moving from a high of $188 to $94. It has crashed below the 50-period moving average and $101, invalidating the double-bottom pattern.

CoreWeave shares are now along the 61.8% retracement level. The most likely scenario is where it continues falling as the market reacts to the earnings and then bounce back once the dust settles.

CoreWeave stock price plunged this week after its second-quarter earnings and lockup expiry date. This volatility will likely be temporary as the company still has solid fundamentals, including its revenue growth and market share in the data center industry.

Disclaimer

This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions