- CoreWeave stock price has soared to its highest point since January.
- The short interest has jumped to nearly 15% as concerns about its rising debt.
- Technical analysis suggests that the stock has more upside in the near term.
CoreWeave stock price continues to recover this year as the company’s deal-making has accelerated. CRWV soared past the key $100 resistance level, reaching its highest point since January 28. Still, investors continue to take short positions amid growing concerns about its debt.
CoreWeave Has Made Major Deals Recently
CoreWeave stock price has continued its strong bullish momentum after inking some major deals this year. It recently raised an additional $2 billion from NVIDIA, making it its biggest investor. As part of the deal, the company will get earlier versions of NVIDIA GPUs and the upcoming CPUs.
Most importantly, CoreWeave’s scale has made it easier to attract hyperscalers as clients. Last week, it inked a major deal with Anthropic, the owner of Claude. As part of this deal, the company will provide computing data to Anthropic starting later this year. As a result, it now counts nine out of the leading ten AI models as clients.
The company also expanded its business with Meta Platforms, building on a previously announced partnership. It also has partnerships with big companies like Microsoft and OpenAI. In its last financial results, the company said that its revenue backlog has jumped to over $60 billion.
CoreWeave’s growth trajectory is not cheap, which explains why many investors are taking the opposite trade. Its short interest has moved to 15%, making it one of the most shorted companies in the US.
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Is the Soaring Debtload a Risk to CoreWeave Stock?
The main reason for this is that its debt has jumped. In March, the company raised $8.5 billion in a GPU-backed transaction. Last week, it announced several fundraising announcements, including a $3.5 billion convertible offering. In total, it made announcements worth over $9 billion.
CoreWeave will continue raising capital due to substantial capital expenditures, expected to be between $30 billion and $35 billion this year. In its most recent financial results, the company reported $14.6 billion in long-term debt, up from $1.4 billion in 2023.
The management has justified the debt binge, noting that its growth trajectory deserves it. It also believes that soaring debt will help it gain a larger market share than other neocloud companies like IREN and Bitfarms.
Most importantly, the company believes that its GPUs will be more valuable in the future. Its goal is to eventually sell these GPUs after a few years as it upgrades to newer models.
On the positive side, CoreWeave has become one of the fastest-growing companies in the US, with its annual revenue rising from $15.8 million in 2022 to $5.1 billion last year. Wall Street analysts expect its annual revenue to rise by 142% this year to $12.4 billion and by 142% next year to $23.1 billion.
CRWV Stock Price Technical Analysis
The daily chart shows that CoreWeave share price bottomed at $64, its lowest level in November and December last year. It was the lower side of the descending triangle, a popular bearish continuation sign.
The stock has now rebounded and moved above the descending trendline, which connects the highest swings in June and October last year and January and February this year. Moving above that level invalidated the bearish outlook.
It has now moved above the 50-day Exponential Moving Average (EMA), while the Relative Strength Index (RSI) has jumped above the neutral 50 level.
Therefore, the stock will likely continue soaring, with the next key target being at $114.55, its highest point on January 28. A move above that price will signal further gains, potentially to $153, its highest level on October 10.
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