A large number of stocks will soon be unlocked! How long can CoreWeave's high stock price hold up?

Driven by the AI boom, cloud computing service provider CoreWeave has experienced explosive growth in its stock price, but it is about to face a severe test with the first large-scale unlock of shares since its IPO.

According to FactSet data, approximately 84% of CoreWeave's Class A shares will be unlocked on Friday, primarily held by company insiders, including co-founder and CEO Mike Intrator and key supplier NVIDIA.

A large number of CoreWeave shares will enter the trading market, potentially causing stock price fluctuations. MoffettNathanson analyst Nick Del Deo noted in a client report on Wednesday: “It is currently impossible to determine the selling intentions of insiders, and the company's ownership is highly concentrated in their hands.”

Analysts hold a cautiously optimistic view of the company's business prospects but generally maintain a neutral rating on its stock performance. CoreWeave currently has a market capitalization approximately 36 times the adjusted revenue forecast for the next four quarters by Wall Street analysts, even higher than the 31 times multiple of AI chip giant NVIDIA.

This event will also test whether the market's enthusiasm for the AI infrastructure sector remains strong and whether the supply-demand relationship can continue to develop favorably for CoreWeave. According to FactSet data, approximately 5.4% of CoreWeave's outstanding shares are currently shorted, compared to about 15% for server manufacturer Super Micro Computer, which is also driven by AI demand.

Strong Growth and High Investment

Despite facing unlock pressure, CoreWeave's business growth remains robust.

The company's revenue in the second quarter reached $1.2 billion, more than tripling from the same period last year, primarily due to its data centers designed specifically for AI workloads and equipped with NVIDIA's latest and hard-to-obtain Blackwell series chips.

However, the market is disappointed with the company's revenue backlog growth being below expectations, and there are concerns about CoreWeave's plan to significantly increase capital expenditures in the fourth quarter of this year. CoreWeave's stock plummeted nearly 21% on Wednesday and continued to decline in pre-market trading on Thursday. Since its IPO at the end of March this year, CoreWeave's stock price has surged nearly 200%.

CoreWeave currently carries over $11 billion in total debt and is still consuming cash while expanding its network construction.

Mike Intrator stated during the earnings call on Tuesday evening: “Expanding our capacity and services remains a key factor for our success in this structurally supply-constrained market.” He also revealed that the company expects the megawatt capacity of its data center network to approach nearly double its current level by the end of this year

Tech Giants' Clients and Expansion Strategy

CoreWeave's growth largely depends on its major clients, such as tech giants Microsoft and Meta. These companies have raised their capital expenditure forecasts this year and have indicated that they will continue to maintain strong spending plans next year. Last month, after Microsoft and Meta released quarterly reports showing a significant increase in capital expenditures, CoreWeave's stock price surged nearly 11% in a single day.

The company is also driving business growth through large deals, such as the $4 billion expansion agreement reached with OpenAI in May, with a contract term of four years. Additionally, CoreWeave announced last month that it would acquire data center infrastructure company Core Scientific for approximately $9 billion in stock, demonstrating the company's aggressive expansion strategy.

It is noteworthy that CoreWeave's IPO size is relatively small, involving only about 11% of its outstanding shares. This limited stock supply has also contributed to pushing up the stock price, which has nearly tripled since the IPO, even after a significant drop on Wednesday.

Market analysts believe that as long as the demand for CoreWeave's computing power remains strong, its stock is likely to remain a popular investment target. However, as more shares flood the market, investors will pay closer attention to whether the company can continue to meet the growing demand for AI computing and whether its high valuation can be sustained