CoreWeave rout deepens ahead of post-IPO lockup expiry

The sight you see in CoreWeave is a bunch of people climbing out of a building’s window after the fire alarm rings, fearing they’ll be trampled underfoot by a bunch of larger people standing near the door.

Shares of the AI cloud computing company are nose-diving, down double digits as of 11:38 a.m. ET, bringing the two-day rout in the stock following the release of Q2 earnings to nearly 30%.

Those results weren’t bad, in and of themselves; revenues and adjusted operating income came in ahead of expectations and management offered fair reasons for why Q3 guidance was on the light side by pointing to a ramp in Q4.

But CoreWeave’s Q2 results, as we long detailed, were always going to be a negative catalyst for the stock because the lockup period for the vast majority of its holders expires at the close of trading two days after the announcement — that is, the close of trading today.

This is exactly what Bank of America analyst Brad Sills was talking about when he cut his price target on the stock, citing the “near term overhang” following earnings.

To extend the metaphor, no one knows if there’s a fire yet — whether or not those large holders will actually be eager to take profit on their still substantial gains. But the prospect of more CoreWeave supply being unlocked is clearly a non-fundamental factor that’s driving the stock’s recent woes.