Why Did Nebius Group Stock Plunge 11.66%?

On April 3, 2025, Nebius Group's stock experienced a significant drop of 11.66% in pre-market trading, raising concerns among investors about the company's financial health and market prospects.

Nebius Group has been facing financial challenges, including limited cash reserves and unrealistic revenue growth targets. These issues have cast doubt on the company's ability to compete effectively in the high-end AI market, contributing to the recent decline in its stock price.

Despite these challenges, Nebius Group reported a substantial increase in revenue for 2024, growing by 462%. The company has set ambitious targets for annual recurring revenue (ARR), aiming for $750 million to $1 billion. However, the market appears to be skeptical about the company's ability to achieve these targets, given its current financial constraints.

Analysts have noted that Nebius Group's stock is currently undervalued at 2.9x EV/ARR compared to its AI peers. This valuation discrepancy suggests that the market may be overlooking the company's potential for growth, but it also highlights the risks associated with investing in a company with limited cash reserves and aggressive revenue targets.