RJ Hamster
🦉 The Night Owl Newsletter for November 11th
Unsubscribe The Quiet Setups Driving Year-End Moves (From Stock Wire News)CoreWeave’s Guidance Cut: A Buying Opportunity in Disguise?Written by Jeffrey Neal JohnsonCoreWeave (NASDAQ: CRWV) stock dropped over 15% after its third-quarter earnings report, a sharp reversal for the high-flying artificial intelligence (AI) infrastructure provider. The drop was a direct reaction to a cut in the company’s full-year 2025 revenue and capital expenditure guidance, a headline that sent skittish investors heading for the exits.Beneath the surface of that guidance change, however, CoreWeave delivered a record-breaking quarter, beating revenue estimates and nearly doubling its backlog of future business. This has created a stark disconnect between the company’s long-term fundamentals and its current, battered stock price. For investors, it presents a critical question: Is the market overreacting to a short-term problem while ignoring a massive long-term opportunity?A Supply Delay, Not a Demand CrisisThe negative catalyst that drove the stock down needs to be understood in context. The guidance reduction stems from a supply-side issue, not a problem with customer demand. During CoreWeave’s earnings call, management disclosed a delay from a single third-party data center developer in delivering a powered shell, the physical building ready for GPU installation. This is a timing issue that pushes revenue and planned capital spending from the fourth quarter of 2025 into the first quarter of 2026.Crucially, management provided key information that mitigates this risk. They stated that the affected customer has already agreed to an adjusted delivery schedule that preserves the full value of the original contract. This signals strong customer confidence and limits the financial damage of the delay.This operational hiccup comes shortly after the company terminated its planned acquisition of Core Scientific in October. Rather than a sign of weakness, management framed the decision as a disciplined move to avoid overpaying for an asset. This pivot reinforces a key part of CoreWeave’s evolving strategy: a hybrid approach to infrastructure that combines leasing with an increasing focus on self-build projects, like the massive data centers planned for Pennsylvania and New Jersey. This diversifies CoreWeave’s supply chain, providing greater control over its long-term destiny.The Numbers That Truly MatterWhile the market focused on the guidance revision, the real story of CoreWeave’s third quarter was the monumental and accelerating demand for its platform. This is best illustrated by the company’s revenue backlog, which represents contractually committed future business.The backlog surged to $55.6 billion, representing a 271% year-over-year increase.To put that in perspective, the company added over $25 billion to its backlog in the third quarter alone, driven by massive new and expanded deals with the world’s most sophisticated AI players. This provides an unparalleled level of long-term revenue visibility.Furthermore, the quality of this backlog has improved dramatically. Management noted that no single customer now represents more than approximately 35% of the backlog, down from a concentration of roughly 85% at the start of the year. This diversification significantly reduces customer risk.This future demand is backed by powerful current performance. The company’s results for the third quarter showcased its strong execution:Revenue Beat: Q3 revenue hit a record $1.36 billion, growing 134% year-over-year and surpassing analyst expectations.Operational Profitability: The company generated $838 million in Adjusted EBITDA, more than doubling from the prior year on a solid 61% margin.The Price of Growth: Justifying the PremiumWith a market capitalization that has fluctuated wildly, the central question for investors is whether the company’s valuation is justified. From a growth investor’s perspective, the market is pricing the stock not on past performance but on its future potential to dominate a rapidly expanding, multi-trillion-dollar market.While the company continues to report GAAP net losses (-$110 million in Q3), these figures are driven by heavy but necessary investments in new infrastructure. A review of the company’s non-GAAP metrics reveals the significant cash-generating potential of its core business. In Q3, CoreWeave’s Adjusted Operating Income grew 74% year-over-year to $217 million on a stable 16% margin. This demonstrates that the company’s aggressive growth is being built upon a highly profitable operational foundation.Furthermore, CoreWeave is managing its capital structure with increasing sophistication. In the third quarter, it closed new debt facilities at significantly lower interest rates. This ability to lower its cost of capital while rapidly scaling is a key indicator of financial maturity.An Opportunity in the Overreaction?The sharp divergence between a temporary, single-supplier delay and a monumental, multi-year demand profile has created a significant valuation gap. Following the sell-off, the average Wall Street analyst price target of over $130 now implies substantial potential upside from the stock’s current level.For investors who can look past the short-term headline and focus on the monumental $55.6 billion backlog, the market’s overreaction may represent a compelling entry point. The underlying demand for CoreWeave’s services has never been stronger, and the company is taking disciplined steps to secure its supply chain for the long run. The road ahead may be volatile, but the foundation for growth has been firmly established. READ THIS STORY ONLINEYou’ve Got to See This Pattern Before 2025 Picks Up… (Ad)Between tariff chatter, consumer fatigue, and year-end fund moves, markets are restless.But beneath the noise, something familiar is happening again — the same quiet setups that often appear before new rotations begin. The pros aren’t reacting to headlines; they’re studying accumulation patterns, insider flow, and liquidity shifts that hint at where the next real trend could form. Our new Signal Intelligence Report reveals how to read those footprints before they turn into headlines — and how to avoid the year-end traps catching retail traders off guard. [GET THE FREE REPORT + TRADE ALERTS NOW]Strategy Shares Plunge as Bitcoin Retreats—More Pain Ahead?Written by Jordan ChusslerIt has been a forgettable second half of the year so far for enterprise analytics and mobility software firm Strategy (NASDAQ: MSTR). The company, formerly known as MicroStrategy, has lost more than 47% since its year-to-date (YTD) high on July 16. That shows quite the reversal from 2024, when the stock hit its highest levels since before the dot-com crash sent it spiraling downward. But a lot has changed in 25 years, and this time around, Strategy’s plummeting share price has nothing to do with a bubble. In fact, the recent sell-off in AI and nuclear stocks has little to do with the company’s poor performance, nor does its financial performance last quarter. When Strategy reported Q3 earnings on Oct. 26, it beat on both the top and bottom lines, posting GAAP earnings per share of $8.42 versus analysts’ expectations of $7.90 and revenue of $128.7 million, exceeding analysts’ expectations of $116 million.Instead, the bloodbath in shareholder value can be directly attributed to the company’s enormous stake in crypto. MSTR Is Now Highly Correlated With BTCStrategy’s Bitcoin (BTC) reserve is now up to 641,692 BTC. For context on how much of the company’s assets are now tied up in the crypto, on July 16—when Strategy hit its YTD high—Bitcoin was trading for $117,489.60. At the time of writing, the largest crypto by market cap is trading for $105,691.30. While that represents just a 10% decrease for Bitcoin, it has taken shape much differently for Strategy, whose stock, as previously mentioned, is now down more than 47% from its 2025 high. Meanwhile, its Bitcoin reserve—which was valued as high as $75.623 back in July—is now worth $67.821 billion.As a result, the company’s financials took a sizable hit, and that didn’t go unnoticed by investors or Wall Street’s bears, who are currently shorting nearly 10% of Strategy’s float. Strategy posted strong Q3 earnings but continued to see its stock decline, leaving shareholders in an awkward position as they try to determine whether the company can be evaluated independently of Bitcoin.What Forward Guidance Looks Like With a Bitcoin Reserve At its heart, Strategy remains a tech company. Specifically, the company still has a strong enterprise software business, which still contributes to its top line. But that component of cash flow has been shrinking at a rapid clip. In 2021, the company’s net cash from operating activities stood at $3.68 million—nothing to write home about, but not in the red. But last year, that figure fell to -$8.78 million. That seismic shift represents a 338.58% decrease. That’s because Strategy’s primary means of generating income now is through its Bitcoin reserve strategy, which requires funding BTC purchases via capital raises (e.g., equity and debt issuances). That equity raise is achieved by new share issuance—both common and preferred stock—which in turn has increased concerns about share dilution. As a result, shareholders have been owning increasingly smaller portions of the company, thereby causing it to underperform Bitcoin. It is part of a plan that the company has embraced in order to raise $42 billion through 2027, with its hopes pinned to Bitcoin’s price eventually reaching $5 million. If those sound like lofty expectations, it’s because they are. According to market consultancy firm Grand View Research, Bitcoin is expected to grow at a compound annual growth rate (CAGR) of 26.2% through 2030. Even at a CAGR of 26.2%, that would equate to approximately 15.6 years until Bitcoin’s value grew from its current price to $5 million per coin. Meanwhile, Strategy’s debt is skyrocketing. In 2023, total liabilities (e.g., liabilities less shareholder equity) were $2.598 billion. Last year, the amount grew to $7.614 billion—a 193% increase. Are Investors Buying Strategy—or Bitcoin Through Strategy?Consequently, when Strategy now issues forward guidance, it isn’t doing so in the same manner as most publicly traded companies. Instead of projecting prospective revenue, cash flow, and net income based on various lines of business, its guidance is heavily correlated with Bitcoin, relying on the performance of the cryptocurrency. Inasmuch, when the company reported Q3 earnings late last month, its guidance incorporated a year-end price target for Bitcoin of $150,000. But that guidance may not be enough to persuade an investor to choose Strategy’s Bitcoin approach rather than directly investing in the digital asset or crypto spot price exchange-traded funds that provide exposure without share dilution. For what it’s worth, the smart money has been unimpressed. Institutional ownership is below 60%, with outflows of $9.35 billion surpassing inflows of $7.36 billion over the past 12 months. READ THIS STORY ONLINEThe Quiet Setups Driving Year-End Moves (Ad)Every December, the same thing happens. While headlines focus on big names and holiday sentiment, the real moves begin where few are looking — in quiet accumulation, steady volume, and early setups that show real conviction. Most traders miss it because they chase what’s already in motion. Our new End-of-Year Market Brief breaks down how to identify those quiet signals before they go public — and how to spot the footprints that separate fake-outs from true setups. [GET THE FREE REPORT + TRADE ALERTS NOW]BigBear.ai Stock Is Range-Bound—Wall Street Isn’t Buying the HypeWritten by Thomas HughesBigBear.ai (NYSE: BBAI) remains a speculative investment, as the 20% share price spike following the Q3 release is unsustainable. Each bit of good news within the report is offset by a negative that points to the same old story. While BigBear.ai appears to be well-positioned in the AI ecosystem, it just isn’t getting the right kind of attention.The most interested parties seem to be the bears—no pun intended—with short interest at record highs ahead of the release and rising over the past few months. The best that can be said of BBAI’s stock price surge is that it is a knee-jerk move, driven (at least in part) by short covering, and the risk is high that short sellers will continue to cap gains at the top of BBAI’s trading range. The trading range has been in place since shortly after the IPO and is capping gains at the IPO price point. The action in 2025 tested and confirmed the level as strong resistance three times before the release, and a significant increase in volume accompanied it. The volume is tied to short selling and retail interest, as institutional and analyst activity do not reflect active accumulation, far from it.While the institutional activity has been bullish on balance for the last few quarters, they own only 7.5% of the stock and provide weak support at best. That leaves retail traders and short sellers to contend with each other, resulting in increased volatility in this market.MarketBeat monitors five analysts covering the stock, and all have provided updates this year. The takeaway is that all provided a bearish update, including price target reductions, downgrades, or reaffirmed sell ratings. The critical detail is that the trend is negative, with sentiment falling from Buy to Hold over the past few months, and there is a high expectation that the stock will trade within the $4 to $8 range, well within the long-term trading range.  BigBear.ai Outperformed in Q3: So What? BigBear.ai had a better-than-expected quarter in Q3 with revenue of $33.14 million, outperforming MarketBeat’s reported consensus by 420 basis points, but that is about the end of the good news. Although revenue is better than expected, it is down by more than 20% from the prior year, contrary to global tech and AI trends.Likewise, earnings were better than expected but were offset by a narrower gross margin driven by the loss of higher-margin contracts, increased SG&A, including ad spend, and a wider loss. So, the 3-cent-per-share loss is four cents better than expected, but that’s due to the increased share count, not the company’s performance. Guidance is equally tepid. The company merely reaffirmed its full-year outlook, discounting Q4’s strengths and forecasting a weaker Q4 than its prior guidance. The move to acquire Ask Sage is a catalyst with the potential to move the needle and get this stock above its critical resistance. Still, it also carries significant risks, including closing the deal, integration, and competition. Competition is BigBear.ai’s most significant hurdle, with larger players like Palantir (NASDAQ: PLTR) already in position to dominate the government/defense AI arena. BBAI Stock Is Range Bound: Higher Highs Are UnlikelyBBAI’s 20% stock price surge is impressive but linked to the 20% short-interest and unlikely to continue higher. The move puts the market within spitting distance of the critical resistance point, with insufficient catalysts to move the needle. The likely outcome is that gains will be capped in the $8 to $10 range, leading to a significant price pullback as the market continues meandering within its range. READ THIS STORY ONLINEThe Market Leaves Clues—Most Just Don’t See Them (Ad)By the time the story makes news, it’s already too late.Every major breakout starts the same way: quietly. At Krypton Street, our research team specializes in spotting those hidden signals that often precede real movement. We’ve just released a free Early Signals Brief showing how to track them — and how a few simple filters can help you avoid false setups.GET THE EARLY SIGNALS BRIEF + REAL-TIME MARKET ALERTS HEREMore StoriesInsiders Sold Big at These 3 Stocks—Should You Worry?Nuclear Stocks Are Melting Down—Should Investors Panic?The next phase of America’s decline has begun… (Ad)3 Data Memory Stocks Beating NVDA This YearDatavault AI’s 314% Upside: Huge Potential or Wall Street Mirage?Shares Down, Price Targets Up: 3 Stocks Upgraded After +10% DropsRumble’s $767M Acquisition Marks Bold Pivot Into AI InfrastructureThe Night Owl is a financial newsletter that provides in-depth market analysis on stocks of interest to individual investors. Published by MarketBeat and Early Bird Publishing, The Night Owl is delivered around 9:00 PM Eastern Sunday through Thursday. If you give a hoot about the market, The Night Owl is the newsletter for you.  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