CoreWeave: Overpaying For Growth Post 253% Rally Isn't Smart (Rating Downgrade)

(7min)

Summary

  • CoreWeave has been on a run since our buy at $43.75 per share, hitting a high of $166, but with premium multiples and widening net losses we're eyeing a reset.
  • There are a lot of positives at play for CoreWeave, but jumping in now isn't smart considering they're all priced in.
  • What isn't priced in are the financial risks: widening net losses, heavy reliance on expensive debt, and urgent need for upfront CapEx to stay competitive.
  • Falling GPU rental prices and rapid tech obsolescence threaten CoreWeave’s growth story at current levels; this is not the next Nvidia—avoid FOMO at these levels.
  • This idea was discussed in more depth with members of my private investing community, Tech Contrarians. Learn More »

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We upgraded CoreWeave (NASDAQ:CRWV) to a buyback on April 11th at $43.75 per share, since the stock is up a whopping 253.37% to a high of $166 per share and currently trades at around $154.90. Our take was simple: CoreWeave wouldn't

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This article was written by

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Tech Stock Pros is a team of three former technology sector engineers with a long history of investing in the tech sector.

They run Tech Contrarians, an investing group providing institutional-level company research to individual investors. Utilizing a live portfolio with quarterly updates, bi-weekly newsletters, and answering questions daily via chat, Tech Stock Pros aims to demystify investing in the technology sector. Learn more.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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