CoreWeave stock: CRWV faces major headwinds ahead of earnings

CoreWeave stock price remained in a tight range this year, even as other companies in the data center industry like Hut and Terawulf soared.

CRWV was trading at $100, up by 53% from its lowest level in December last year. This article explores what to expect as it publishes its financial results.

CoreWeave is to publish its financials today

CoreWeave is a former Bitcoin mining company that has transitioned into the artificial intelligence industry, where it has become a major player in the data center industry. 

It is now running large data centers and offering services to top companies like Microsoft, Meta Platforms, and OpenAI. Also, its market capitalization has jumped to over $50 billion.

The next key catalyst for the CoreWeave stock price will be the upcoming financial results, which will provide more color about its business and its future capital expenditure.

The most recent results showed that CoreWeave business continued doing well in the third quarter as demand for its computing power continued. 

These results showed that its revenue jumped by 134% in the third quarter to over $1.4 billion.

Its backlog continued growing, reaching $55.6 billion, most of which came from OpenAI, the creator of ChatGPT. Its capital expenditure during the quarter to $1.9 billion.

Wall Street analysts believe that CoreWeave’s business continued doing well in the fourth quarter as demand for its business continued booming.

The average estimate is that its revenue rose to $1.53 billion, with the most optimistic analyst expecting it to hit $1.6 billion. 

If this estimate is correct, the annual revenue will come in at $5.1 billion, much higher than the $1.9 billion in the previous year.

This growth will then accelerate this year, with analysts expecting it to make over $12 billion.

Most importantly, the company’s losses are expected to continue narrowing in the coming years.

Its expected loss-per-share for 2025 is $2.58 and for the following year will be $1.38.

CRWV is facing major headwinds

CoreWeave’s business is facing some major headwinds this year. The most important one is its capital expenditure, which has continued rising because of its data center build up. It is spending billions of dollars a quarter, which may affect its profitability.

The other major risk is that the industry has become highly competitive, with companies like Nebius, IREN, TeraWulf, Bitfarms, Riot Blockchain, and Cipher Mining getting into the industry.

This competition means that it will struggle to attract more hyperscalers.

Additionally, OpenAI, its biggest customer, recently scaled back its spending ambitions.

It now expects to spend about $600 billion in capital expenditure by 2030, down from the previous guidance of $1.4 trillion. 

The other major risk is its valuation, which has soared in the past few months.

In this case, the company has a backlog of over $55 billion against a market cap of over $50 billion.

CoreWeave stock price prediction: Technical analysis 

The 12-hour chart shows that the CRWG stock price has rebounded in the past few weeks.

This rebound happened after receiving a $2 billion investment from Nvidia, the biggest company in the world.

The stock has moved above the key support level at $84.30, its lowest level in September last year.

It has moved above the Supertrend indicator, while the Relative Strength Index has continued rising.

Therefore, the most likely scenario is where the stock retreats after the results.

If this happens, the next key support level to watch will be at $85, its lowest level in September.

A move below that level will point to more downside, potentially to $74, its lowest level on February 5.

On the flip side, a rebound may push it to the next key resistance level at $115, its highest level on January 28.