- CoreWeave stock has formed a descending triangle pattern.
- The company’s short interest has jumped to 15%.
- Investors are concerned about the soaring capital expenditure.
CoreWeave stock price has moved sideways this year despite some important news from the company. CRWV was trading at $80 on Monday, a few points above the year-to-date low of $67.70. What next for the stock as its short interest remains at an elevated level?
CoreWeave Stock is Wavering Despite Strong Catalysts
The CRWV share price has remained in a narrow range in the past few months despite the company having some important catalysts.
The most recent catalyst for the company was a $2 billion investment it received from NVIDIA, the biggest company in the world. This investment made NVIDIA one of its biggest shareholders since it was already a major investor in the company.
CoreWeave also published strong financial results, which showed that its business continued growing last year. Its revenue jumped by 168% YoY to over $5.1 billion, while its revenue backlog soared by 342% to $66 billion. This backlog comes from companies like Microsoft, OpenAI, and Meta Platforms.
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Analysts believe that the company’s business will continue growing in the near term. The average estimate is that its revenue will jump by over 142% this year to $12.45 billion, while its revenue will hit $23 billion next year.
The company’s growing backlog by blue-chip companies has helped it to raise capital cheaply. It recently closed a landmark $8.5 billion financing facility backed by its Microsoft business. In a statement, the CFO said:
“This type of financing that we are doing is the most sophisticated and scalable way to finance the build-out of artificial intelligence infrastructure.”
Still, Wall Street investors are still worried about the company, with the short interest rising to 15%. The main concern among investors is that the company is spending billions of dollars and its debt is surging.
Its capital expenditure will surge to between $30 billion and $35 billion this year. Its debt, on the other hand, jumped to over $14 billion, a trend that may continue rising.
The other challenge is that the industry is becoming highly competitive, with companies like Nebius, IREN, TeraWulf, and Bitfarms moving into the industry. Most Bitcoin mining companies, including large names like Riot and Mara Holdings are also pivoting to the industry.
CRWV Stock Price Prediction: Technical Analysis
CoreWeave stock chart | Source: TradingView
The daily timeframe chart shows that the CRWV stock has formed a giant falling triangle pattern, which is made up of a descending triangle and a horizontal support. The support connects the lowest swings since November last year.
Also, the upper side of the triangle connects the highest swings since June last year. It has moved below all moving averages, while the two lines of the triangle are nearing their confluence.
Therefore, the stock will likely have a strong bearish breakdown in the near term, with the initial target being at $64, the lower side of the triangle. A move below that level will point to more downside, potentially to the psychological level at $50.
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