CoreWeave Plummets 5.25%: What's Behind the Sudden Downturn?

Summary
• CoreWeave (CRWV) trades at $80.375, down 5.25% intraday
• Intraday range: $78.70–$83.70, with 52-week range of $33.52–$187.00
• Turnover hits 18.14M shares, 5.67% of float
• Legal investigation and earnings revisions fuel sell-off

CoreWeave’s stock has plunged sharply amid regulatory scrutiny and revised financial forecasts. The company’s Q3 earnings report revealed capacity constraints and a $2B convertible note offering, triggering investor panic. With the stock trading near its 52-week low, traders are scrambling to assess the fallout from stalled data center projects and mounting liabilities.

Regulatory Scrutiny and Earnings Disappointment Trigger Sharp Sell-Off
CoreWeave’s 5.25% intraday decline stems from a confluence of factors: a federal securities investigation, Q3 earnings revisions, and a $2B convertible debt offering. The company’s November 10 earnings report revealed it had cut full-year revenue and capex forecasts due to data center capacity limitations. This followed a 16.31% single-day drop in October after similar guidance cuts. The latest 4.06% decline reflects ongoing concerns about stalled AI infrastructure projects, $14.7B in long-term debt, and a $33B market value loss since mid-2025.

Data Processing Sector Mixed as Microsoft Gains 0.45%
The Data Processing & Outsourced Services sector remains fragmented, with Microsoft (MSFT) rising 0.45% despite CoreWeave’s collapse. While CoreWeave’s struggles highlight AI infrastructure bottlenecks, Microsoft’s Azure division continues to benefit from enterprise AI adoption. However, sector-wide risks persist, including regulatory scrutiny of AI data centers and rising energy costs. CoreWeave’s 5.25% drop contrasts with the sector’s 0.12% average gain, underscoring its unique vulnerabilities.

Bearish Options and ETFs to Hedge CoreWeave’s Volatility
• RSI: 56.75 (neutral)
• MACD: -4.80 (bearish), Signal: -6.18
• Bollinger Bands: Upper $94.15, Middle $78.59, Lower $63.02
• 200D MA: Not available

CoreWeave’s technicals suggest a bearish bias, with price near the lower Bollinger Band and MACD in negative territory. The RSI at 56.75 indicates no immediate overbought/oversold conditions, but the 52-week low proximity raises short-term risks. For options, two contracts stand out:

• CRWV20260102P75 (Put):
- Strike: $75, Expiry: 2026-01-02
- IV: 70.63% (high volatility)
- Delta: -0.2586 (moderate sensitivity)
- Theta: -0.05998 (slow time decay)
- Gamma: 0.03277 (high sensitivity to price moves)
- Turnover: 184,238 (liquid)
- Leverage Ratio: 49.08% (high reward potential)
- Payoff at 5% Downside: $0.375 (max(0, 75 - 76.36))
- This put offers asymmetric upside if CoreWeave breaks below $75, leveraging high IV and liquidity.

• CRWV20260102P72 (Put):
- Strike: $72, Expiry: 2026-01-02
- IV: 69.97% (high volatility)
- Delta: -0.1614 (moderate sensitivity)
- Theta: -0.05616 (slow time decay)
- Gamma: 0.02503 (moderate sensitivity)
- Turnover: 22,566 (liquid)
- Leverage Ratio: 79.69% (high reward potential)
- Payoff at 5% Downside: $0.375 (max(0, 72 - 76.36))
- This put balances gamma and leverage, ideal for a mid-term bearish play.

Action: Aggressive bears may consider CRWV20260102P75 into a breakdown below $75.50, while CRWV20260102P72 offers a safer entry if the stock consolidates near $73.

Backtest CoreWeave Stock Performance
The CRWV ETF has demonstrated resilience following a -5% intraday plunge from 2022 to the present. The backtest shows a 3-day win rate of 52.63%, a 10-day win rate of 51.58%, and a 30-day win rate of 50.53%, indicating a higher probability of positive returns in the short term after the intraday plunge. The average 3-day return is 3.01%, the 10-day return is 4.03%, and the 30-day return is 16.09%, suggesting that CRWV can recover from such events with decent gains.

CoreWeave’s Volatility: Time to Hedge or Ride the Rebound?
CoreWeave’s 5.25% intraday drop reflects deepening concerns over capacity constraints and regulatory risks. While the stock’s 52-week low proximity and bearish technicals suggest further downside, the sector’s mixed performance—led by Microsoft’s 0.45% gain—hints at broader AI infrastructure resilience. Traders should monitor the $78.59 middle Bollinger Band as a critical support level. For now, bearish options like CRWV20260102P75 offer high leverage if the stock breaks below $75. Watch for a potential rebound on improved data center project updates or a sector-wide AI rally.