Data center company CoreWeave (CRWV) has recently caught the attention of CNBC’s Jim Cramer, who praised the company’s business but warned that the stock appears “pretty expensive.” Cramer, a longtime market observer, explained that CoreWeave’s recent IPO is part of a current trend that has seen IPOs being treated like meme stocks, with retail investors jumping in quickly before the market can properly price them.
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Cramer pointed out that CoreWeave’s IPO was especially vulnerable to this trend. Indeed, the company went public at $40 per share with a relatively small float (only 37.5 million shares), and raised only $1.5 billion instead of the $2.5 billion originally expected. Because there were so few shares available, it became easier for retail traders to drive up the price.
Interestingly, he added that he’s seen this kind of pattern before, going as far back as 1998. When there’s a limited supply and high retail enthusiasm, prices can skyrocket quickly, meaning that prices are being driven by momentum rather than fundamentals. And that’s exactly what happened with CoreWeave, which now has a market cap of over $50 billion. Even though Cramer is still a “huge fan” of the company itself, he believes that investors should be cautious because the stock may be overvalued at this point.
Is CRWV a Good Stock to Buy?
Turning to Wall Street, analysts have a Hold consensus rating on CRWV stock based on six Buys, 13 Holds, and two Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average CRWV price target of $107.59 per share implies 15.3% downside risk.
