CoreWeave stock price has been in a strong downtrend in the past few months, leading to a $52 billion wipeout as its market cap dropped from $88 billion in June to $35 billion. It has dropped from the year-to-date high of $187.16 to $71.30. So, will it rebound as insiders sell?
CoreWeave stock at risk as insiders sell?
CoreWeave stock price has plunged, mirroring the performance of the companies in the AI industry.
IREN stock has plunged by 37% from the year-to-date high, while Nebius has dived by 37% in the same period. Other companies like Terawulf and Bitfarms have also dived in the past few weeks.
Therefore, there are signs that investors have largely abandoned the industry as concerns about the AI bubble remained in this period.
Another possible reason why the CRWV stock has crashed is that insiders have continued dumping their shares. Data compiled by Barchart shows that insiders have made 66 sale orders in the last three months. They have sold 33.7 million shares, currently worth over $2.9 billion.
Insiders have sold over 40.5 million shares, currently worth over $3.5 billion in this period, a sizable amount for a company currently worth $35 billion.
Insiders like Michael Intrator, the CEO, and Brian Venturo, the CSO, have sold some of their shares this month.
Insider sales are often seen as red flags as it could be a sign that their hope in the company is diminishing. However, in some instances, these sales are usually a normal part of the process. In this case, there is a possibility that these insiders sold to cash out after the lockup expiry.
Other reasons behind the CRWV stock crash
The CoreWeave stock price has also crashed as activity in the futures market has pointed to more downside. Data compiled by Barchart shows that the put/call ratio stands at 0.8. A ratio below 0.7 is considered bullish, while one above 1 is normally bullish.
Meanwhile, while the industry is growing, there are signs that it is becoming highly competitive. In addition to CoreWeave, other companies like Core Scientific, Nebius, IREN, Terawulf, Cipher Mining, and Bitfarms have all moved to the industry.
Indeed, recent announcements shows that hyperscalers have choices when selecting their infrastructure partners. For example, Nebius recently announced a large deal with Microsoft, while IREN reached a $9.7 billion deal with Meta Platforms. Google has made a deal with TeraWulf.
Therefore, there is a likelihood that deal flow will be a bit muted in the future. Also, there is a possibility that the potential clients will negotiate better deals in the future.
On the positive side, the most recent results showed that CoreWeave is one of the fastest-growing companies in the United States. Its revenue surged by 134% to $1.4 billion, while its adjusted EBITDA rose by 61% to $838 million. It also narrowed its adjusted net loss and boosted its revenue backlog to $55.6 billion.
CoreWeave share price analysis
The daily timeframe chart shows that the CRWV stock price has plunged in the past few days. It has moved from a high of $152.9 in October to a low of $71.
The stock has plunged below the key support level at $84.45, its lowest point on September 5. It is also hovering slightly above the 78.6% retracement level at $66.65 and moved below the 50-day and 25-day moving averages.
Therefore, the most likely scenario is where the stock continues falling as headwinds remain. If this happens, it may drop to the key psychological point at $50, and then bounce back later this year or early next year.
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