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✅ Key idea:
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Key takeaways
- Options pricing indicates that traders expect CoreWeave shares to rise or fall by as much as 14% this week.
- The cloud computing company is expected to say its losses narrowed and its revenue more than doubled from a year ago when it reports third-quarter earnings after the closing bell on Monday.
- CoreWeave has reported earnings only twice since going public in March; The stock fell on both occasions, after big rallies on those prints.
CoreWeave (CRWV) is scheduled to report third-quarter results after the closing bell on Monday, with traders anticipating a big move for the stock following earnings.
Options pricing indicates that traders expect CoreWeave shares to move as much as 14% in either direction by the end of this week. A move of that magnitude would push the stock up to $118.70 at the high end, erasing some of the losses incurred amid last week’s decline in tech stocks, or pull it back to $89.30, its lowest price since early September.
CoreWeave has reported quarterly results only twice since trading, neither of which has helped the stock. In May, shares fell more than 2% the day after the company reported earnings, despite better-than-expected results, with revenue increasing more than 400% year over year. Shares fell more than 20% after August earnings, when the company reported a larger-than-expected loss.
Why is this important?
CoreWeave shares have soared since its debut in March, as investors looked past the company’s unprofitability to focus on growing revenues driven by demand for artificial intelligence. How investors react to the company’s results on Monday could reflect Wall Street’s appetite for risk and sentiment around rising AI stocks.
Sure enough, CoreWeave shares advanced significantly leading into both editions. The stock rose nearly 70% between its late March IPO and the May report, and was up about 120% ahead of the August results. This time could be different. Before Monday’s session, CoreWeave shares were down about 30% since its last earnings.
CoreWeave’s revenue has soared in the past year and a half amid increased demand for AI-enabled cloud computing platforms. The company landed several major customers last quarter, signing a $14 billion deal with Meta Platforms (META), a $6 billion deal with Nvidia (NVDA), and a $6.5 billion expansion of its existing agreement with OpenAI, the maker of ChatGPT.
The cloud computing provider is expected to report a net loss of $284.4 million in the third quarter, compared to a loss of $359.8 million in the same quarter last year. Its revenue is expected to jump 120% year over year to $1.3 billion, according to analyst estimates compiled by Visible Alpha.
Wall Street is divided on the outlook for CoreWeave stock, with five of the 10 analysts with current ratings tracked by Visible Alpha calling the stock a “buy,” while the other half gave it a “hold” rating. Their average target of $158.83 represents about 53% upside from the stock’s closing price last Friday.
🔥 What do you think?
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