TLDR
- CoreWeave stock dropped nearly 30% in five days after slashing 2025 revenue guidance by $150 million
- The company’s Q3 backlog surged to $55.6 billion, up 85% from prior quarter with OpenAI and Meta deals
- Free cash flow stands at negative $8 billion over 12 months as infrastructure spending accelerates
- Wall Street consensus shows Moderate Buy with 13 Buy, 12 Hold, and 1 Sell rating across 26 analysts
- Stock trades at $77 but analysts see average upside to $146.17, representing 89% potential gains
CoreWeave experienced a rough week in the markets. The AI cloud infrastructure company saw shares plunge nearly 30% over five trading sessions.
CoreWeave, Inc. Class A Common Stock, CRWV
The catalyst was a revenue guidance reduction. CoreWeave lowered its 2025 forecast to $5.1 billion from $5.25 billion. Management pointed to data center delays and compute supply issues as primary factors.
Shares now trade around $77. That’s inching closer to the company’s March 2025 IPO price of $40. But the stock still maintains a 108% gain year-to-date.
Q3 revenue came in at $1.36 billion. That represents more than 100% growth compared to the same period last year. The top-line performance impressed investors, but the outlook worried them.
Cash Burn Rate Raises Questions
CoreWeave is spending heavily to build infrastructure. The company burned through $8 billion in free cash flow over the past year. That’s a massive cash outflow for a company trying to scale operations.
Profitability remains elusive. Operating margins reached just 4% in Q3. Interest payments on debt pushed net income into negative territory.
Some market observers think CoreWeave wins contracts by offering lower prices than competitors. The slim margins appear to support that theory.
Contracts Provide Long-Term Visibility
The backlog numbers tell a compelling story. CoreWeave reported $55.6 billion in contracted revenue for Q3. That’s an 85% jump from the previous quarter.
Major tech players are committing big dollars. OpenAI signed contracts worth $22.4 billion. Meta agreed to a $14.2 billion deal running until 2031.
Nvidia adds another layer of support. The GPU manufacturer owns 7% of CoreWeave and provided a $6.3 billion capacity guarantee through 2032. This arrangement generates revenue even when GPUs sit idle.
Customer additions continue at a steady pace. Recent wins include CrowdStrike, Rakuten, Poolside, and Jasper. The pipeline for AI cloud services remains robust across multiple sectors.
Analyst Community Remains Divided
Compass Point’s Michael Donovan started coverage with optimism. He issued a Buy rating with a $150 price target. Donovan highlighted the massive backlog and Nvidia relationship as key strengths.
J.P. Morgan took a cautious approach. Analyst Mark Murphy downgraded CoreWeave from Buy to Hold. His $110 target reflects concerns about near-term execution challenges.
Murphy acknowledged supply chain problems that delayed projects. Some revenue shifted to later quarters as a result. But he noted the customer acquisition engine keeps running.
The broader analyst community shows mixed sentiment. Of 26 analysts covering the stock, 13 rate it Buy, 12 say Hold, and one recommends Sell. The average price target sits at $146.17.
CoreWeave carries a market cap of approximately $39 billion. The company has accumulated debt to finance its rapid expansion. Those debt obligations create interest expenses that squeeze already thin profit margins.
This week’s selloff may have already priced in the guidance reduction. The question now is whether the stock represents value at current levels or if profitability concerns will continue weighing on shares.
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