- CoreWeave stock price pulled back after reporting its financial results.
- The company’s revenue surged as its backlog neared the $100 billion milestone.
- While its business is thriving, investors are concerned about its debt and dilution.
CoreWeave stock price retreated by over 2% in extended hours, even as the company published strong financial results. It dropped to $127, down slightly from this week’s high of $138. Still, this retreat may prove to be temporary as the company continues to fire on all cylinders.
CoreWeave Stock Slips After Earnings
CoreWeave, a top player in the AI data center industry, reported strong financial results as demand for its services surged. Its revenue surged by 112% YoY to $2.1 billion, while the revenue backlog soared by 284% to $99.4 billion.
This is a big milestone as the company had a $66 billion backlog in the last financial results. It inked several deals in the first quarter, including by companies like Microsoft, Anthropic, Cohere, and Jane Street.
Meanwhile, the company’s adjusted EBITDA rose by 55% to $1.2 billion, while the operating income rose to $21 million.
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The main concern about CoreWeave is that its capital expenditure continues to rise, a trend that may continue in the coming years as GPUs, memory chips, and power prices jump. It spent $6.8 billion in capex.
The other concern is that its debt load is rising and dilution continuing, with the average shares rising to 527 million from 246 million in the period last year. It ended the first quarter with over $7.5 billion in current debt and $17.2 billion in long-term debt.
While these are huge numbers, they are justified as the company rushes to build its data centers. Most highly profitable companies today went through this phase. In a statement, the CEO said:
“AI natives and enterprise customers are choosing CoreWeave because we sit between the models and the silicon, delivering the infrastructure, software, and expertise required to build and run AI at scale.”
CRWV Stock Price Technical Analysis
The daily timeframe chart reveals that the CRWV stock price has been in a strong recovery in the past few months as demand for its solutions soared. It peaked at $137 this week, much higher than the year-to-date low of $64.
CoreWeave stock remains above the key resistance level at $114.56, its highest point on June 28. Moving above that level invalidated the double-top pattern.
It has now remained above all moving averages, a sign that bulls remain in control. Therefore, the stock will likely continue rising as bulls target the next key resistance at $152, its highest point in October last year.
On the other hand, a drop below the key support at $115 will invalidate the bullish outlook.
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