CoreWeave stock price has rebounded modestly in the past few days, moving from last month’s low of $65.43 to the current $88. Still, the stock remains much lower than the year-to-date high of $186, meaning that it has erased billions in market capitalization as its valuation dropped from $89 billion to the current $67 billion.
CoreWeave stock price has crashed as competition rises
The CoreWeave share price has been in a strong downward trend in the past few months, moving from the year-to-date high of $186 to the current $88.
There are several reasons why the stock has crashed this year, including concerns about the rising costs in the AI infrastructure industry.
Most importantly, the company’s industry has become highly saturated as more companies have joined the sector. Some of the most notable companies that are investing in the data center business are popular names like IREN, Bitfarms, and Nebius.
This competition means that, while CoreWeave’s business is growing, there is a likelihood that it may struggle to attract large hyperscalers like Microsoft, Meta Platforms, and Amazon as clients.
In its case, the company generates most of its revenue from a few deals, including with Microsoft, OpenAI, and Meta Platforms. Its deal with Microsoft is worth over $10 billion, while the ones with OpenAI and Meta Platforms are worth over $22.5 billion and $14 billion, respectively.
The impact of the rising competition is starting to show as large companies have selected other similar companies in the past few months. For example, Microsoft recently inked a $9.7 billion deal with IREN, while Microsoft reached a bigger $14 billion partnership with Nebius, a company that was spun off from Yandex.
Meanwhile, TeraWulf, another Bitcoin mining company, has inked a multi-billion-dollar deal with Google. Therefore, while the need for computing is growing, CoreWeave may struggle to find many such deals in the future.
This likely explains why its short interest has jumped to 8.53% this year. The other reason is that the company is highly exposed to OpenAI, a company that is expected to remain in the loss-making zone for years.
READ MORE: CoreWeave stock at risk after the $52B wipeout as insiders sell
Analysts expect the CRWV growth to accelerate
Meanwhile, CoreWeave’s business is doing well, helped by the recent deals with companies like OpenAI and Microsoft.
The most recent results showed that the company’s revenue rose by 134% in the last quarter to $1.4 billion, while its backlog jumped by 271% to $55.6 billion.
CoreWeave’s capital expenditure stood at $1.9 billion in the last quarter, while its adjusted EBITDA was over $838 million, giving it a 61% margin.
Analysts believe that this growth momentum will accelerate in the coming years. For example, the average estimate is that the annual revenue will be $5.12 billion this year, followed by $12.05 billion in 2026, a move that will make it one of the fastest-growing companies.
CoreWeave share price technical analysis
The daily timeframe chart shows that the CRWV stock price has come under pressure in the past few months, moving from the year-to-date high of $186 in June to the current $88.
It has recently moved above the important resistance level at $84.45, its lowest level in August and September this year.
CoreWeave stock remains below the 50-day and 100-day Exponential Moving Averages (EMA). It has also moved below the Supertrend indicator.
Therefore, the most likely scenario is where the stock makes a strong bearish breakout, potentially to the next key support level at $65.43. A move below that support will point to more downside, potentially to key psychological level at $50.
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