CoreWeave Stock Plummets 7.60% in Third Consecutive Day of Losses, Trading Volume Ranks 18th

On June 25, 2025, CoreWeave (CRWV) experienced a significant decline, with its stock price dropping by 7.60%, marking the third consecutive day of losses and a cumulative decrease of 13.12% over the past three days. The company's trading volume reached 29.64 billion, placing it at the 18th position in the day's market activity.

CoreWeave has identified a substantial market opportunity, projecting its total addressable market to reach $400 billion by 2028. This optimistic outlook has contributed to analysts' expectations for the company's revenue growth.

Despite a challenging start as a publicly traded company, CoreWeave's stock has since surged, more than tripling from its initial public offering (IPO) price. The company's strong demand for AI computing capacity and a major deal with OpenAI and Alphabet have bolstered investor confidence.

CoreWeave's business model involves significant debt, some of which is backed by its AI accelerator hardware. The company secures long-term deals with its customers, with the top two generating 77% of total revenue in 2024. These contracts are typically take-or-pay, ensuring revenue visibility and mitigating the risk associated with high debt levels. As of March 31, CoreWeave had approximately $8.7 billion in debt, with interest payments consuming 27% of total revenue in the first quarter.

However, the company's valuation remains a concern. With a market capitalization of around $86 billion and a book value of less than $2 billion, CoreWeave's price-to-book value ratio exceeds 40, which is unusually high for a capital-intensive company. This valuation has led at least one analyst to downgrade the stock to "hold," citing near-term challenges despite long-term optimism.

CoreWeave's business model may face challenges as the AI infrastructure industry matures. The take-or-pay contracts could become less attractive to customers once demand no longer outstrips supply, leading to reduced revenue visibility and increased volatility. Additionally, any changes to Microsoft's plans, which accounts for a significant portion of CoreWeave's revenue, could have a substantial impact on the company's financial performance.

Despite the potential risks, CoreWeave's revenue is expected to continue growing as demand for AI infrastructure remains strong. However, investors should carefully consider the company's valuation before making investment decisions.