CoreWeave’s stock (CRWV) is up over 7% at the time of writing after the software infrastructure firm announced plans to sell $1.5 billion worth of bonds that will mature in 2031. In a press release, the company said that the money raised will be used for general purposes, such as paying down existing debt. This move follows a similar bond offering in May, when CoreWeave announced a $2 billion debt plan that caused its shares to rise by 19%.
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The stock got another boost last week after CoreWeave announced a $6 billion project to build a new AI data center in Pennsylvania. Investors also seem to like the fact that the firm’s biggest customers include OpenAI and Microsoft (MSFT). This is because they are leading tech companies with deep pockets, which means they can afford to take on massive contracts with CoreWeave. As a result, CoreWeave has seen strong momentum this year, with the company’s share price more than tripling since its initial public offering in March.
However, not all investors are convinced. In fact, some are worried about the company’s growing debt pile and whether demand for its AI-related services will remain strong over time. In response, CEO Michael Intrator defended the company’s spending in May by saying that it is in response to major demand from key clients. Nevertheless, as CoreWeave continues to raise money and scale quickly, the market will be watching to see if demand remains strong enough to justify its aggressive growth strategy.
Is CRWV a Good Stock to Buy?
Turning to Wall Street, analysts have a Hold consensus rating on CRWV stock based on four Buys, 15 Holds, and two Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average CRWV price target of $99.72 per share implies 24.7% downside risk.
