CoreWeave’s post-earnings surge disappears after guidance fails to validate the >100% rally
Shares of CoreWeave surged as much as 11% in the wake of its inaugural quarterly report as a publicly traded company, with the cloud computing company posting better-than-expected sales and touting a massive revenue backlog tied to its deal with OpenAI.
But that post-earnings pop fizzled less than 30 minutes into the conference call, with the stock turning well into the red and now trading virtually flat in the premarket on Thursday.
On the surface, the guidance unveiled on the call was just fine: the outlook for Q2 and full-year sales topped estimates, though adjusted operating income for the current quarter was light relative to expectations. But there are times when “just fine” clearly isn’t good enough. We’ve seen a similar dynamic with Nvidia during recent quarters, where solid earnings beats and better-than-expected guidance fail to inspire a big rally in the shares.
The after-hours high-water mark for CoreWeave propelled the stock more than 110% off its lows seen less than a month ago. Climbing a mountain gets a lot more difficult after an already brisk ascent brings you to previously unforeseen heights. Steep inclines at high elevations with thinning oxygen leave you more vulnerable to accidents.
Case in point: a handful of Wall Street outfits are raising their price target on the stock in the wake of these results — Morgan Stanley to $58, Wells Fargo to $60, Barclays and Mizuho to $70, and Stifel to $75. What all of those have in common is that none of them are above the stock’s post-earnings peak of $75.
(Separately, BofA boosted its price target to $76, a buck above the stock’s top level in the after-hours session, while DA Davidson cut the stock to “underperform” with a $36 price target.)
