D.A. Davidson analyst Gil Luria maintained a Sell rating on CoreWeave, Inc. Class A (CRWV – Research Report) yesterday and set a price target of $36.00.
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Gil Luria’s rating is based on several critical financial observations regarding CoreWeave, Inc. Class A. The company has disclosed a financing structure that lacks upfront equity and fails to provide returns to current equity holders during the contract period. This is compounded by the company’s reliance on non-project debt to finance its investments, which, when combined with a high borrowing rate, significantly erodes any potential cash flow.
Additionally, the projected residual value of CoreWeave’s assets appears overly optimistic. With recent price reductions by competitors like Amazon AWS, the future revenue from these assets is expected to be much lower than initially anticipated. Furthermore, the interest rates used in the company’s financial illustrations suggest that previous deals may have been unprofitable, casting doubt on the overall enterprise value, which seems to be primarily owned by debt holders. As a result, the potential value to shareholders is minimal, prompting the Sell rating.
Luria covers the Technology sector, focusing on stocks such as Nvidia, Datadog, and Snowflake. According to TipRanks, Luria has an average return of 14.4% and a 59.85% success rate on recommended stocks.