CoreWeave stock rating held at Market Perform by Citizens JMP

Citizens JMP analysts reiterated a Market Perform rating on CoreWeave (NASDAQ:CRWV) on Wednesday, noting the stock’s dramatic price increase despite limited news since its initial public offering. According to InvestingPro data, the stock has delivered an impressive 287% return over the past six months, though it currently trades above its Fair Value.

The research firm pointed out that CoreWeave shares have experienced a four-fold increase following the IPO, with the only significant development being additional information about the company’s five-year contract with OpenAI. The company’s market capitalization has reached $74.35 billion, despite reporting negative earnings of -$5.19 per share in the last twelve months.

According to Citizens JMP, many investors, including those closely involved with the IPO process, may not have fully understood CoreWeave’s economic framework and capital structure, partly due to limited disclosure from the company.

The analysts maintained their neutral stance on the stock, explaining that their Market Perform rating now reflects valuation concerns rather than business model or capital structure risks that previously existed.

Citizens JMP highlighted that CoreWeave currently trades at approximately 23.0 times its expected 2027 EBIT, which they consider fair value given the company’s higher-than-average risks and need to raise over $25 billion in additional capital.

In other recent news, CoreWeave has announced the appointment of Ernie Rogers as Chief Architect of Strategic Financing. Rogers brings a wealth of experience from his previous role as COO at Magnetar, where he was instrumental in driving innovation and efficiency. Meanwhile, CoreWeave, in collaboration with NVIDIA and IBM (NYSE:IBM), has set a new benchmark in machine learning performance with its MLPerf Training v5.0 submission, utilizing 2,496 NVIDIA Blackwell GPUs, which marks a significant advance in AI capabilities. The submission demonstrated a swift training run of the Llama 3.1 405B foundational model, highlighting the efficiency of CoreWeave’s infrastructure.

In another development, DA Davidson reiterated an Underperform rating on CoreWeave, citing concerns about the company’s financing structure and the projected returns for shareholders. Analyst Gil Luria pointed out issues with the lack of upfront equity in CoreWeave’s contract financing and raised doubts about the profitability of the company’s deals. Additionally, Applied Blockchain has secured a significant 15-year lease agreement with CoreWeave, expected to generate approximately $7 billion in revenue. However, Compass Point downgraded Applied Blockchain’s stock from Buy to Neutral, expressing caution due to potential equity dilution needed to fund capital expenditures.

Lastly, Nvidia (NASDAQ:NVDA)’s latest chips have shown progress in training large AI systems, with data released by MLCommons indicating a decrease in the number of chips required for training. CoreWeave’s chief product officer, Chetan Kapoor, noted a shift in the AI industry towards assembling smaller groups of chips for separate AI training tasks, which allows for faster training times. These developments underscore CoreWeave’s ongoing efforts to enhance its AI infrastructure and strategic financing capabilities.

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