ALERT: You Might Want To Avoid Buying This Stock Soon...
In a Nutshell
Coreweave is a highly volatile speculative stock trading at elevated levels with a $58B market cap despite losing $1.9B annually on $7.5B revenue, making it a dangerous short candidate with 40-55% downside risk. The stock exhibits repeated pump-and-dump patterns, and at current prices the potential losses far outweigh upside gains. Traders should use small position sizes (20-30% allocation) and wait for clear rejection signals before shorting, while avoiding this stock entirely if they lack strong risk management.
These notes were generated by AI and may contain inaccuracies.
Ricky discusses one of his recent trades from Friday, which was one of his biggest trades of the week. He made this trade while driving from Southern California to Reading, California for an Iron Man 70.3 race, focusing on trading as a passenger during the 9-hour drive. He made a little over $9,000 that day.
Coreweave is an incredibly volatile stock that went from lows of $58 to nearly $59, ripped up to highs of $117 to nearly $118, then pulled back to lows of $100. The last gap up occurred after earnings were reported. Coreweave is notorious for pumping and dumping repeatedly. Beginners with terrible risk management are advised to stay away from this stock.
On Friday, the stock demonstrated extreme volatility within the first hour of market open. It moved from lows of $106 to highs of $110 (4% move), then pulled back from $110.30 to lows of $103 (6% move down), then pumped up to highs of nearly $108 (4% move up), back down to lows of $103.50 (3-4% move), ripped up to highs of nearly $106, back down to $102.50 (3.5% move), and ended the day from lows of $102.50 to highs of nearly $106 (3-4% move) before a small pullback in extended hours.
Coreweave has shown consistent patterns of ripping up and dipping down repeatedly. The day after earnings, it pumped up to highs of $111 then retraced to lows of $106, fell to lows of $103, ripped up to highs of $117.50 (13% move), then back down (10% move). From current highs, a pullback to pre-earnings levels represents 15-16% downside. Zooming out shows potential 37% downside from current highs of $100-$105 to previous lows.
The stock is considered for shorting as a swing trade with mindful position sizing. With over $250,000 in the trading account, the short position for Coreweave would be $10,000-$20,000 due to the extreme risk. The key insight from Friday's trading is that with highly volatile stocks trading sideways, traders should let the price push as high as needed until confirmation of rejection occurs, allowing selling pressure to develop. The same applies to selling pressure - allow it to sell off before confirming signs of support and reversal.
Coreweave trades at a negative P/E ratio of negative 30 times earnings. The company produces $7.5 billion in revenue but loses $1.9 billion annually, with a market cap exceeding $58 billion. It was one of the best-performing stocks from mid to late 2025, experiencing 350% growth to reach $185. The pattern shows strong sell-offs followed by strong rip-ups repeatedly. Net losses widened to $626 million in Q2 2026, with full-year 2026 capex guidance between $35-39 billion. Capex alone is $11.5-13.5 billion, with negative free cash flow yield of 0.24.
Eighteen out of thirty analysts have revised their EPS estimates downward over the past 90 days, indicating significant concerns about the company's trajectory. The business is capital-intensive with aggressive overspending and minimal current returns. During uncertain market times, speculative companies like this tend to crash the hardest when markets correct.
Coreweave has a history of 50% pullbacks from highs to overall lows, with 55% pullbacks being common. While the stock could potentially pump higher to $126 or $138 based on previous highs, the 42% downside risk is considered much more significant than the upside potential at current levels. The potential for profit does not outweigh the potential for loss at these elevated levels.
At overbought levels, position size should be trimmed rather than going all-in or using 50% allocation. This ensures capital is available to take advantage of potential drops to lows of $60-65. The approach involves going in with 20-30% exposure instead of 50-70% to conserve capital for when real deals present themselves. While markets cannot be timed, preparation is possible. Shorting speculative stocks carries greater risk and is not recommended for beginners, especially when market conditions favor bulls with S&P 500 and NASDAQ hitting new all-time highs.
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