CoreWeave Inc. raised $1.5 billion in its initial public offering, a downsized deal that reflects how stock market volatility is hurting demand for even highly anticipated listings.
The cloud-computing provider sold 37.5 million shares at $40 apiece, it said in a statement, confirming an earlier Bloomberg News report. That’s down from an initial plan of 49 million shares at $47 to $55 each that could have raised as much as $2.7 billion.
The shares will begin trading Friday on the Nasdaq under the ticker CRWV. Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. are joint lead bookrunners for the IPO.
Nvidia Corp., an existing investor in CoreWeave, is anchoring the share sale with an order of about $250 million, a person with knowledge of the matter told Bloomberg, asking not to be identified because the information was private. Representatives for Nvidia declined to comment.
Livingston, New Jersey-based CoreWeave was at one time looking to raise about $4 billion from its listing and target a valuation greater than $35 billion. That was before the broader stock market slumped and volatility dented optimism. At the revised range, CoreWeave would have a value of about $23 billion on a fully diluted basis.
Led by co-founder and Chief Executive Officer Michael Intrator, CoreWeave was started in 2017 as a crypto mining firm. It was an early adopter of Nvidia’s graphics chips for data centers, getting ahead of a wave of demand for powerful processors to run AI applications. It’s building out data centers based on Nvidia’s chips to offer AI-related computing.
More than three quarters of CoreWeave’s 2024 revenue was generated by business with its two biggest customers, one of which was Microsoft Corp. This high concentration, coupled with the company’s elevated debt and spending levels, has raised questions among some analyst about how sustainable CoreWeave’s growth path is.
“CoreWeave is the largest in the new neocloud category, but we see it mostly as a highly levered way for Microsoft to offload less desirable workloads and Nvidia to leverage a small investment into a very large customer,” D.A. Davidson & Co. analyst Gil Luria wrote this week. “This structure may continue to work as long as demand for AI continues to grow exponentially.”
In a separate report this week, TD Cowen said that Microsoft is canceling new data center projects in the US and Europe due to an oversupply in computer clusters that power AI training — a potentially worrying sign for companies engaged in AI infrastructure. Alibaba Group Holding Ltd. Chairman Joe Tsai has warned of a potential bubble forming in data center construction, arguing that the pace of that buildout may outstrip initial demand for AI services.
CoreWeave also has material weaknesses in its internal controls over financial reporting, according to the section of filings where pre-IPO companies disclose the risks to their businesses. The issues cited included insufficient IT controls over applications supporting financial reporting and a lack of qualified personnel in related roles, the filings show.
Along with Nvidia, the firm counts Magnetar Capital, Coatue Management, Jane Street, JPMorgan Asset Management, Fidelity and Lykos Global Management among its investors. None of CoreWeave’s founders were planning to sell stock in the IPO.
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