While it seemed like shares of CoreWeave (CRWV -15.82%) were on a perpetually higher trajectory, the artificial intelligence (AI) hyperscaler's stock proved otherwise this week. Investors were less than thrilled with the company's second-quarter 2025 financial results, and the bearish stance that analysts have taken toward CoreWeave have motivated investors to trim their positions or exit them altogether.
According to data provided by S&P Global Market Intelligence, as of 1:47 p.m. ET Thursday, shares had plummeted 21.3% since the end of last Friday's trading session.
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Investors aren't distracted with a rosier outlook for 2025
Reporting second-quarter results on Tuesday, management thought it gave investors a lot to celebrate. Besides beating analysts' revenue estimates, it reported strong year-over-year growth in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) as well as a more robust backlog than what it had at the same point last year.
What's troubling investors, however, is the apparent lack of progress the company will make toward achieving profitability in 2025. In the second quarter, it reported an adjusted operating income margin of 16.4%, narrower than the 21.5% number it reported for the same period last year. Moreover, if CoreWeave achieves the midpoint of its 2025 guidance and reports adjusted operating income of $815 million on revenue of $5.25 billion, it will represent an adjusted operating income margin of 15.5%.
Should investors unknit CoreWeave from their portfolios amid the market sell-off?
Growth stocks like CoreWeave often demonstrate considerable volatility once they hold their initial public offerings (IPOs). With the AI hyperscaler debuting on public markets in March, the wild swings in its stock are unsurprising.
Concerns about the company's profitability are valid, but it's way too soon for long-term investors to enter panic mode and sell their positions. If you're a CoreWeave shareholder today, the best route is to stay the course.
