DA Davidson cuts CoreWeave to Underperform, says ‘not a business worth scaling’

As previously reported, DA Davidson analyst Gil Luria downgraded CoreWeave (CRWV) to Underperform from Neutral with an unchanged price target of $36. The first detailed earnings report, with updated actuals and guidance, confirms the firm’s concern that CoreWeave is “not a business worth scaling, and we question the value of the equity,” the analyst tells investors. The firm believes CoreWeave is a business not worth scaling if it can only generate 5% returns on its assets and has to pay 12.5% interest on the debt necessary to acquire those assets, arguing that the notion that “this destruction of capital is a matter of scale does not hold up” for a company at a $4B revenue run rate already operating 33 data centers.