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Key Points
- CoreWeave has rebounded about 54% from its one-month low, fueled partly by stunning sales growth despite the company’s continued lack of profitability.
- While revenue grew 112% in the second quarter, CoreWeave’s net profit margin worsened year over year as soaring interest expenses consumed much of the incremental gains.
- A broad range of insiders have aggressively sold hundreds of millions of dollars worth of shares, raising a major warning sign for investors.
Neocloud stock CoreWeave (CRWV) has sharply risen by about 54% from its one-month low of $60.55, making now a good time for investors to consider heading to the sidelines after the latest rally.
The artificial-intelligence (“AI”) data-center company is both debt-heavy and relies on continual financing to stay afloat. Worse, the people who know the company best – executives and other insiders – have been unloading the stock as fast as they can.
In short, if the AI bubble bursts, there are reasons to think that CoreWeave could go to zero.
If you look at the surface of CoreWeave’s results, you might think that nothing’s the matter. In fact, the company’s rapidly increasing sales in recent quarters would seem to nullify any bearish fears. But a closer look shows why I said CoreWeave is one of five AI stocks that could go bust.
| Period | Sales growth | Operating margin | Interest expense | Net margin |
| Q1 2025/2026 | 112% | -2.7%/-6.9% | $264/$536* | -32.1%/-35.5% |
| Q2 2025/2026 | 112% | 1.6% / -1.9% | $267/$640* | -23.9%/-24.3% |
On the top line, CoreWeave grew sales 112% year over year in both the first and second quarters of 2026. For any normal company, such rapid sales growth would quickly translate into much higher operating margins, but the improvement has been less obvious here.
We didn’t see higher operating margins in the first quarter, as they fell from negative 2.7% last year to negative 6.9% in the first quarter of this year. Second-quarter operating margin also fell, from 1.6% last year to negative 1.9% this year. However, operating margin improved sequentially from the first quarter to the second quarter, so it’s important to see whether this trend continues.
While operating margin is a key financial factor, CoreWeave’s heavy use of leverage makes the net margin especially important. Despite CoreWeave’s stellar sales growth, it’s taking on significant interest expense to finance that growth. As a result, net margin is not improving much, especially in the second quarter.
For example, CoreWeave paid $267 million in interest expense during the second quarter a year ago. In the second quarter this year, interest costs ballooned to $640 million. So, despite CoreWeave’s 112% sales growth, net margin actually worsened year over year, from negative 23.9% to negative 24.3%.
While CoreWeave reports those fast-growing sales figures in its press releases, it leaves out the fast-growing liabilities that finance them. To see that, you need to turn to Form 10-Q, where you can see just how much the company relies on liabilities.
Of the company’s $77.1 billion in assets as of June 30, 2026, about $72 billion are financed by liabilities. That leaves a meager $5 billion in shareholders’ equity supporting that pile of assets. In other words, CoreWeave is massively leveraged. If the value of those assets is written down by 6.5% or more, the company will have zero or negative shareholders’ equity.
Zero or negative shareholders’ equity might be fine for a company that has a strong history of turning a profit, but that’s not CoreWeave. It must keep financing its assets and paying interest.
With the company’s market capitalization of about $51.4 billion, investors are willing to pay about 9.1 times the book value of the company. Put another way, the market is saying the company’s assets are 9.1 times as valuable as their book value.
Despite huge growth, this valuation doesn’t make sense given the lack of profitability.
CoreWeave Insiders Are Selling Aggressively
But this analysis is not the only thing telling you CoreWeave’s valuation doesn’t add up. Key company insiders have been telling you all year that CoreWeave is overvalued, selling hundreds of millions of dollars in stock as fast as they can. The company’s recent addition to the Nasdaq 100 Index gave the stock another boost that insiders could sell into.
Before we run through some numbers, CoreWeave bulls will point out (rightly) that insiders may sell for many reasons. They sell to diversify their own portfolios, because they need cash elsewhere, and because they’re raising money to pay taxes on stock grants. At the same time, they typically buy only when they believe the stock is poised to go up.
Or as the old investment saying goes, “insiders sell for many reasons, but they buy for only one.”
But you rarely see the depth and breadth of selling that’s evident at CoreWeave. It’s the kind of thing that you should be terrified of if you own the stock. Insiders have been selling at a furious pace since August 2025 – when the company’s lockup on insider selling expired as part of its initial public offering. They’ve been selling every month since then, too. Plus, there has not been a single insider buy over that time, according to MarketBeat.
Let’s look at selling from the company’s CEO, Michael Intrator, over the past few months.
| Insider | July (Sales/$) | June (Sales/$) | May (Sales/$) |
| CEO Michael Intrator | 7 sales / $75.4 million | 10 sales / $174.5 million | 9 sales / $136.2 million |
Intrator sold shares in seven separate batches in July for a total of $75.4 million, according to MarketBeat. That followed 10 sales for $174.5 million in June and nine sales for $136.2 million in May.
The CEO’s sales pattern goes back to August 2025.
But it’s not just the CEO selling shares. Rather, it’s a “Who’s Who” of CoreWeave that has been getting rid of shares at a brisk pace:
- Brannin McBee, chief development officer
- Nitin Agrawal, CFO
- Kristen McVeety, general counsel
- Brian Venturo, co-founder, director
- Jack Cogen, director
- Chen Goldberg, senior vice president of engineering
- Jeff Baker, chief accounting officer
- Sachin Jain, COO
- Karen Boone, director
The amounts of stock they’ve sold differ, of course, from relatively small sales of a few shares to gargantuan amounts, such as the $49.4 million from Brannin McBee in September 2025 or the $105.3 million from Jack Cogen that same month.
All those sales and literally zero insider buys. Nothing is illegal, but as an investor (or potential investor) in CoreWeave, it’s an unambiguous signal that’s quite valuable.
Insiders selling CoreWeave stock this aggressively tells you almost everything you need to know about it as an investment. Tack on a business that can’t even budge its net profit margin despite 112% sales growth, and you have a stock that could plummet if the AI bubble bursts.
Regards,
James Royal, PhD
Editor’s Note: Whitney Tilson — the hedge fund manager CNBC called “The Prophet” — says America has reached its “Ripping Point.” The old financial order is being torn apart, and he believes most investors have no idea what’s coming in the next six months. He’s named the stocks he thinks will be destroyed in the chaos — and the ones he believes will soar. Watch his free presentation while it’s still available.
