One of my favorite sites to read is Where’s Your Ed At?, which does deep-dives into sectors (like AI) or companies (like CoreWeave), often with a cynical angle. Ed does extraordinary research into his topics, and unlike Slope, which has a hundred rat-a-tat posts every week, Ed might come out with a few articles each month, tops. One of those that made a big impression on me back in March was the not-at-all subtly titled CoreWeave is a Tomb Bomb.
Here are a few tidbits from the article to give you a taste:
- a cursory glance at its financial disclosure documents reveals a business that’s precarious at best, and, in my most uncharitable opinion, utterly rancid.
- CoreWeave’s S-1 tells the tale of a company that appears to be built for collapse, with over 60% of its revenue dependent on one customer, Microsoft.
- Worse, despite making $1.9 billion in revenue during the 2024 financial year, the company lost $863 million in 2024, with its entire future riding on “explosive growth” that may not materialize, and even if it does, would require CoreWeave to spend unfathomable amounts of money on the necessary capex investments.
And that’s just from the first page; suffice it to say that Ed completely dismantles CoreWeave and leaves the reader believing that, should they ever manage to seduce the public into buying this steaming dog turd, it’s bound to tumble into oblivion.
The article was written before the IPO. Let’s check in on CRWV, shall we?
So, yeah, it looks like the first few weeks had a few bumps (although it never sank meaningfully below the initial offering price), and over just the past month, it’s up over 200%.
To me, this drives home two things I think we all know are true:
- a company can be absolutely mispriced, but given the right market, it can absolutely thrive (sometimes for years) before the harsh reality starts to catch up with it;
- it’s unwise, if one is a chart-based trader, to do anything with a stock without a substantial amount of history so that it can reveal its personality, patterns, and nuances over the long haul (hopefully many years).
As captivated as I was by Ed’s article, I’d never dream of monkeying around with CRWV based on his conclusions. I have, for the entirety, stayed at a safe distance, somewhat amused that this stock appears to be rocking the free world in spite of plenty of logical reasons why it has no business doing so.
