This has baffled many Wall Street analysts who believe the company is in a precarious financial situation despite the explosive revenue growth logged on its top line. “Nothing from a fundamental perspective would support the magnitude of change that we’ve seen in the stock since the IPO,” says Nick Del Deo, a managing director at MoffettNathanson who covers CoreWeave and other tech companies.
Of the 19 analysts who cover the company, just three had a “buy” rating on the stock and four others had positive opinions while the consensus rating is firmly “hold” as of June 6. The average price target among all analysts who cover the stock is $72.61, well below the $145 level Coreweave was trading at on Friday and the 52-week high of $166.63.
One Coreweave short seller experiencing the squeeze is Felix Wang, a managing director and partner at Hedgeye Risk Management. Yet, Wang maintains his short position despite facing potentially enormous losses. His argument is multifaceted but boils down to the company’s net debt, lease liabilities and its dependence on Microsoft and a tiny handful of others for the bulk of its revenues. “Investors should be more concerned about their operating and financial obligations,” he tells Fortune.
These incredulous analysts may be vindicated in September when the lockup period on the IPO expires in September and restricted shareholders can offload their CoreWeave holdings and the stock price will drop. But as CoreWeave’s stock bounced back Friday after plunging 17% on Thursday, perhaps the only thing that’s clear is that the AI company will continue to leave believers, and skeptics, scratching their heads.
