Nebius Group stock has lost momentum and is now in a deep bear market after falling by over 37% from the year-to-date high. NBIS dropped to $189, with analysts and investors now focusing on the upcoming earnings, which will come out on Wednesday next week.
Nebius Group stock has plunged amid AI concerns
Nebius Group is a top neocloud company that runs large data centers, offering services to companies like Meta Platforms, Revolut, and Microsoft.
The company’s stock has come under pressure in the past few weeks as investors remain concerned about several risks.
For example, there is a risk that the business is being highly competitive. SpaceX has already received large orders from Reflection AI, Anthropic, and Google.
Most importantly, Meta Platforms, its top client, is also slowly entering the industry. Media reports suggest that it is considering selling its extra space to other companies, a move that will make it billions of dollars over time.
More competition is coming from Bitcoin mining companies like Riot Platforms, Mara Holdings, TeraWulf, and Hive Digital. While the data center spending is expected to grow, the rising competition may have an impact on companies like Nebius and CoreWeave.
Additionally, there is a risk that Nebius’ planned spending will be higher than expected because of the rising memory, server, and GPU costs. This, in turn, may push Nebius to borrow more and even sell shares to finance its operations.
Options market predicts volatility after earnings
Nebius Group will publish its financial results next week, and analysts expect them to show that its growth accelerated last quarter. The average estimate is that its revenue jumped by 446% in the quarter to $574 million. This growth makes it one of the fastest growing companies in the industry.
More data shows that analysts expect the annual revenue this year to jump by a whopping 538% to $3.38 billion. It will then make over $11.46 billion next year as it fulfils its data center obligations.
Most notably, the company is expected to generate a negative free cash flow as it continues its spending. In the last quarter, the company made a negative cash flow of over $3.3 billion.
The options market points to more volatility next week. Options expiring next week are shows that the implied volatility at 157%, higher than the historical average of 150%. It has a put/call ratio of 1.47, a sign that it has more puts than calls, which is a bearish sign.
Similarly, those expiring on August 21 have a put/call ratio of 2.64, meaning that traders are buying extended-dated protection beyond the earnings event itself, not just hedging the immediate announcement.
Nebius stock price technical analysis
The daily chart shows that the NBIS stock peaked at $299.96 and then started a substantial pullback to a low of $145.9, slightly below the 50% Fibonacci Retracement level of $157. Its lowest level also coincided with the 200-day Exponential Moving Average (EMA).
There are signs that the stock has formed a small triple-top pattern, a popular bearish reversal sign. Therefore, the stock will likely be highly volatile after publishing its financial results. The options market is estimating a move over 10%. As such, with puts being more than calls, this means that it may drop to between $155 and $160.