CoreWeave (CRWV) stock tumbled roughly 11% on Tuesday as insiders moved quickly to sell shares following the expiration of the AI data center company’s post-IPO lockup period. The rapid sales have sparked investor concern and raised questions about the stock’s valuation amid broader volatility in AI-related equities.
According to Bloomberg data compiled from company filings, insiders including CEO Michael Intrator and hedge fund Magnetar have sold more than 7 million shares since the lockup period ended in August. Lockup periods prevent directors, senior officers, or investors with more than 10% of a company’s voting shares from selling stock immediately after an IPO, providing stability and preventing sudden price declines.
“Previous CRWV shareholders have been selling at a very rapid pace following the unlocking of shares,” DA Davidson analyst Gil Luria, who maintains a Sell rating on CoreWeave, told Yahoo Finance. Luria noted that the speed and timing of these sales may indicate that insiders believe the stock is overvalued.
CoreWeave went public in March at $40 per share, and its stock soared above $183 in late June, fueled by investor enthusiasm for the AI trade. The company rents capacity in its data centers, which are equipped with large stores of Nvidia (NVDA) AI chips, to major tech clients including Microsoft (MSFT), Meta (META), and OpenAI (OPAI.PVT). Shares were trading around $92 on Tuesday.
Hedgeye Risk Management analyst Felix Wang, who holds a short position in CoreWeave, described the lockup expiration as “brutal,” calling the stock “a bubble” and noting that momentum in AI-linked equities is fading. Investor concerns have intensified following Nvidia’s latest earnings report, which fell short of expectations, and amid broader fears of a potential AI-driven market bubble.
Analysts also point to CoreWeave’s financial risks. While both Luria and Wang remain generally bullish on the AI sector, they view CoreWeave as particularly risky due to its growing debt burden at high interest rates. Shares fell in mid-August after the company issued a disappointing quarterly outlook for operating income and highlighted mounting interest expenses, signaling that profits are insufficient to cover debt obligations.
The decline in CoreWeave’s stock adds uncertainty to its planned acquisition of data center provider Core Scientific (CORZ). The $9 billion all-stock transaction, announced in July, may now be less valuable for Core Scientific shareholders given CoreWeave’s falling share price. “Core Scientific accepted an offer at one price, and now the price is very materially different,” Luria said. “Usually, when a company makes an all-share offer, the share price doesn’t change that much between announcement and deal close.” Core Scientific stock dropped more than 5% on Tuesday amid the news.
The combination of insider selling, mounting debt, and a cooling AI trade has weighed heavily on CoreWeave shares, highlighting both the risks and volatility inherent in high-profile AI-related companies navigating post-IPO markets.
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