Why CoreWeave Stock Plummeted Today: Valuation Overhang and Liquidity Pressures Undermine Its AI Play

CoreWeave (CRWV) shares fell nearly 5% in early trading today as investors grappled with the stark reality of its $9 billion all-stock acquisition of Core Scientific—and the looming risks of a lockup expiration that could amplify selling pressure. The selloff underscores a growing skepticism about whether the company's sky-high valuation, fueled by AI hype, can be sustained amid mounting liquidity challenges, dilution, and a trajectory of losses stretching into 2026.

The Catalysts for Today's Drop
The plunge followed CoreWeave's announcement of its deal to acquire Core Scientific, which aims to vertically integrate data center ownership. While the move promises cost savings and operational control over 1.3 gigawatts of existing capacity, the all-stock structure—where Core Scientific shareholders will receive 0.1235 shares of CRWV per share—has raised red flags. The immediate effect: a diluted float, with 290 million shares set to hit the market upon the lockup expiration on September 24, 2025.

The lockup expiration alone could trigger a flood of selling. Before the lockup lifts, only 47 million shares were freely tradeable. Post-expiration, the float jumps to over 337 million shares—a 600% increase in available supply. Historical data shows such events typically pressure stocks by 1-3%, but given CoreWeave's already stretched valuation, the impact could be far worse.

Valuation: 9x Sales in a Crowded Market
CoreWeave's $75 billion+ market cap rests on a Price-to-Sales (P/S) ratio of 172.53 as of May 2025—a figure that's 32.5x higher than the broader market's average and nearly double that of Nasdaq 100 peers. For context, industry rivals like Snowflake (SNOW) and Cloudflare (NET) trade at 16.62x and 29.93x P/S, respectively. Even at 9x forward sales, CoreWeave's valuation assumes flawless execution of its AI infrastructure strategy, with no margin for error.

The acquisition further complicates this picture. While Core Scientific's data centers are a strategic asset, the $9 billion price tag—66% above its pre-announcement valuation—adds to concerns about overpayment. Analysts at Mizuho and CFRA have highlighted the risks of overpaying for a company whose core crypto-mining business (89% of revenue) will be spun off. The remaining infrastructure, while valuable, may not justify the premium.

Profitability: A Long Road Ahead
CoreWeave's Q1 2025 revenue surged 420% to $981.6 million, driven by contracts with OpenAI and Microsoft. But losses remain staggering: a $314.6 million net loss in Q1, with projected Q2 losses of $236 million. The company expects to remain unprofitable until late 2026, even as it spends $3–3.5 billion on CapEx this year to expand data centers. With 72% of revenue tied to Microsoft, client concentration adds further fragility.

Analysts are skeptical. Of 22 analysts covering CRWV, just three have a “buy” rating, while 14 advise “hold” or “sell.” CFRA's downgrade this week cited “valuation overhang” and execution risks, while JPMorgan noted the stock's “limited upside” without meaningful margin improvement.

Short-Term Catalysts for Further Pain
- Lockup expiration (September 24): Insiders and investors may rush to cash out after CoreWeave's 330% IPO surge, which inflated its valuation.
- Core Scientific deal approval risks: Regulatory scrutiny or shareholder pushback could delay the merger, prolonging uncertainty.
- Q3 earnings (November 2025): Investors will demand proof of scalability—specifically, whether revenue growth can offset CapEx and losses.

The Bottom Line: Caution Until Proven Scalable
CoreWeave's stock has fallen 17% in a month as reality intrudes on its AI narrative. With a P/S ratio 35x higher than the Nasdaq 100, a lockup overhang of 290 million shares, and a profit timeline extending into 2026, the risks far outweigh the rewards for now.

Investors should wait for two milestones: 1) regulatory approval of the Core Scientific deal without major concessions, and 2) Q3 earnings that demonstrate margin improvement or a path to profitability. Until then, CoreWeave's $75 billion+ valuation feels like a bet on a moonshot—without a parachute.

Final Take: Avoid the stock until fundamentals align with the valuation. The AI infrastructure space is crowded, and CoreWeave's execution will need to be near-perfect to justify its premium. For now, the risks of a valuation reckoning are too great.