CoreWeave (CRWV), an AI data center company, saw its stock sink on Tuesday after a large wave of insider selling. In fact, since its lockup period ended in August, insiders, such as CEO Michael Intrator and hedge fund Magnetar, have sold more than 7 million shares, according to Bloomberg. For reference, a lockup period is a rule that stops major shareholders—like executives or big investors—from selling stock too soon after an IPO, which helps avoid big price drops.
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Unsurprisingly, some analysts believe the fast pace of selling suggests that insiders may think the stock is overvalued. Indeed, five-star DA Davidson analyst Gil Luria, who has a Sell rating on the stock, said the speed of the sales is alarming. Separately, Felix Wang of Hedgeye Risk Management, who is shorting the stock, also said that the end of the lockup period hit hard and called CoreWeave a bubble. He noted that excitement around AI stocks has been cooling off, especially after Nvidia’s (NVDA) recent earnings disappointed investors.
It is worth noting that CoreWeave went public in March at $40 per share and quickly soared to above $183 in June, as investors rushed into AI-related stocks. But its stock has now dropped to around $92. After a disappointing earnings outlook in August and worries about its high-interest debt, analysts say its falling stock price could hurt its $9 billion all-stock deal to acquire Core Scientific (CORZ) by making that offer much less valuable than when it was first announced.
Is CRWV a Good Stock to Buy?
Turning to Wall Street, analysts have a Hold consensus rating on CRWV stock based on six Buys, 16 Holds, and two Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average CRWV price target of $123.45 per share implies 34% upside potential.
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