CoreWeave Stock Price Forecast After Extending Deal With Meta Platforms

Key Insights

• CoreWeave stock price rose after the company extended its deal with Meta Platforms.
• The company ended the last quarter with a revenue backlog of $66 billion.
• The stock has invalidated the forming descending triangle pattern.

CoreWeave stock price jumped by over 2% in the pre-market session after the company announced its extended deal with Meta Platforms, the parent company of Facebook and Instagram. It rose to $92, up modestly from the year-to-date low of $66.9.

CoreWeave Stock in Focus After Meta Platforms Deal

CoreWeave, the largest neocloud company in the world, continued its deal-making spree this week after announcing an extension of its deal with Meta Platforms, a Magnificent 7 company valued at over $1.3 trillion.

The amended deal will see the company provide Meta Platforms with cloud services through December 2032. This deal is now worth $21 billion, higher than the $14 billion that the two companies announced in January this year.

In addition to Meta Platforms, CoreWeave has inked deals with top companies such as Microsoft and OpenAI, positioning itself as the largest provider of these solutions.

The most recent results showed that the company had a revenue backlog of over $66.8 billion, a 342% increase from the same period a year earlier.

This growth will likely continue growing in the foreseeable future as demand for data continues. For example, top companies like Amazon, Google, and Microsoft are planning to spend over $650 billion in capital expenditure this year.

Most of these funds will be spent building their massive date centers, which will benefit companies like Micron, NVIDIA, and AMD that are selling the chips.

Some of these funds will go to neocloud companies like CoreWeave that are building massive data centers in the US and other countries. For example, Meta Platforms recently inked a $27 billion deal with a similar company, Nebius. Other companies building these data centers include IREN, TeraWulf, and Bitfarms.

CoreWeave Revenue Growth is Surging

The ongoing deal-making has helped to make CoreWeave one of the fastest-growing companies in the US. Its recent results showed that its quarterly revenue surged to $5.1 billion last year, up 168% year over year.

At the same time, the company believes the best days are ahead, with annual revenue this year expected to be between $12 billion and $13 billion. CoreWeave has always been a highly conservative company, meaning that its real figure will likely be higher than that.

Still, the main risk for the company is that the ongoing data center build-up is not cheap, especially now that the cost of buying GPUs, servers, and memory chips is soaring.

As a result, the company’s capital expenditure has continued to soar, with management expecting the figure to jump to between $30 billion and $35 billion.

The soaring CAPEX figure explains why the CoreWeave stock remains in a bear market as investors believe that it will continue raising capital. Indeed, the company announced a proposed $3 billion convertible notes offering and another $1.26 billion offering today. This is on top of the $2 billion it raised from NVIDIA.

Therefore, the company will likely continue raising capital, a move that will eventually increase the number of outstanding shares, diluting existing investors.

CRWV Stock Price Technical Analysis

The daily timeframe chart shows that the CRWV stock price has risen modestly in the past few weeks, moving from a low of $64 to the current $89. It has moved slightly above the descending trendline that connects the highest swings since June last year.

A complete move above that trendline will invalidate the forming descending triangle pattern, a common bearish continuation sign in technical analysis.

It has moved above the 50-day Exponential Moving Average (EMA). At the same time, the Relative Strength Index (RSI) has already moved above the neutral point at 50.

Therefore, the stock will likely keep rising in the coming weeks, with the next target being $113, the highest swing on January 29 this year. This view will be confirmed when it crosses the neutral point at $100.

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