- CoreWeave stock price jumped this week after NVIDIA invested in Nebius.
- Technicals show that it has formed a H&S and a descending triangle pattern.
- The company expects to spend up to $35 billion in capital expenditure this year.
CoreWeave stock price rose this week, mirroring the performance of other neocloud companies, after NVIDIA’s investment in Nebius, a top competitor. CRWV traded at $80 on Friday, well below its all-time high of $186. This article explains why the stock may retreat in the near term.
CoreWeave Stock Price Prediction: Risky Patterns Have Formed
The daily chart suggests CRWV stock may be at risk of further downside in the coming weeks or months. This chart shows that the stock remains below the 50-day Exponential Moving Average (EMA).
The stock remains below the Major S&R Pivot Point of the Murrey Math Lines tool, a sign that bears remain in control for now.
Most importantly, the stock has formed two major reversal chart patterns: head-and-shoulders and descending triangle.
The H&S pattern consists of a head, two shoulders, and a neckline. In this case, the neckline is at $68.90, its lowest level in November, December, and March this year. This pattern often leads to a strong bearish breakout over time.
The neckline coincides with the forming descending triangle pattern, whose descending trendline corresponds to the highest swings in June and October last year, and in January and February this year.
The stock remains below the Supertrend indicator. Therefore, the stock will likely have a strong bearish breakdown, initially to the neckline at $68.90. A move below that level will point to more downside, potentially to the Ultimate Support level at $50, down by 35% below the current level.
CRWV Stock Jumped After Nebius Investment
CoreWeave stock rose modestly this week after NVIDIA, the world’s largest company, announced a major investment in Nebius, a similar company that offers artificial intelligence (AI) data center services. This investment came a few weeks after NVIDIA invested a similar amount in CoreWeave.
Still, there are reasons why CoreWeave stock could be at risk of a bearish breakout, which explains why its short interest has jumped to 12.10% today. A rising short interest is a sign that many investors anticipate the stock to drop over time.
One reason is that the industry has become highly competitive, with more companies entering. In addition to Nebius, companies such as IREN, TeraWulf, Bitfarms, Riot Platforms, and Mara Holdings have entered the industry.
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Another challenge is that the company will need to raise capital to fund its capital expenditures. These ways will include using its orders to raise debt and sell shares. Data shows that the company’s outstanding shares have jumped to 354 million from 340 million in July last year.
The company ended the last quarter with over $3.1 billion in cash and short-term investments, while its capital expenditure for the year will be between $30 billion and $35 billion.
CoreWeave’s debt has jumped sharply in the past few years, moving from $1.3 billion in 2023 to over $14.6 billion at the end of this quarter. This debt surge has pushed its annual interest expense from $361 million in 2024 to $1.22 billion last year.
On the positive side, analysts expect the company’s revenue to continue rising, driven by large deals with companies such as Microsoft, Meta Platforms, and OpenAI. The annual revenue is expected to jump by 142% this year to $12.4 billion, followed by $23 billion next year.
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