CoreWeave IPO: CoreWeave’s shares were set to open nearly 18 per cent above their offer price in their Nasdaq debut on Friday, March 28, giving the Nvidia-backed artificial intelligence (AI) infrastructure startup a potential valuation of $27.4 billion on a fully diluted basis. A strong debut would be a welcome sign for the company, especially since its lofty targets already suffered when it had to downsize its initial public offering (IPO).
According to news agency Reuters, it may also offer hope to other IPO candidates that smooth listings are achievable with tempered valuations, even as equity markets are already grappling with tariff-related turmoil. The stock was indicated to open at $47, compared with the IPO price of $40.
Wall Street analysts say the US IPO market is at an inflexion point. This next batch of deals will determine whether the momentum continues through the second quarter or whether issuers decide the risk is worth it. Given the angst over Big Tech’s massive spending spree and fears of competition from China’s AI startup DeepSeek, the debut will test the limits of the AI hype.
CoreWeave IPO: What do fundamentals indicate?
While investors have propelled AI-related companies such as Nvidia and Microsoft to high valuations, CoreWeave has stirred concerns among risk-averse investors. The company provides access to data centres and high-powered Nvidia chips, which have become the most sought-after resource in the race to develop AI applications.
However, 77 per cent of CoreWeave’s revenue last year came from just its top two customers, including Microsoft. At its roadshow, some expressed worries about CoreWeave’s heavy reliance on Microsoft as the tech behemoth’s shifting AI data centre strategy could impact long-term chip demand.
Also Read: DeepSeek under review: US Congress blocks use of Chinese AI for employees amid data security fears
CoreWeave’s capital-intensive business model also raised questions about sustainability. While the company’s growth has been meteoric, analysts say its long-term sustainability is yet to be tested. As of last year, CoreWeave had around $8 billion in debt. The company said earlier this month that it plans to use about $1 billion of the IPO proceeds to pay down debt.
It also leases its 32 data centres and some equipment instead of owning them, resulting in operating lease liabilities of $2.6 billion. While investors appear comfortable with the company’s high leverage since it has strong free cash flow, the risk of commitments not being fulfilled remains a worry. The startup has also consistently posted losses, and IPO investors have been wary of backing companies with no history of profitability in the last few years.
CoreWeave Company details
Founded as an Ethereum-focused crypto-miner in 2017, CoreWeave pivoted to AI a few years later. It shuttered its mining business after Ethereum’s 2022 upgrade, “The Merge,” slashed rewards for miners. In the lead-up to the IPO, it signed a five-year contract worth $11.9 billion with OpenAI, forging ties with the most prominent AI startup.
CoreWeave’s revenue has grown at a breakneck pace, climbing over eightfold last year. However, analysts say it may need to do more to convince investors. CoreWeave’s shares will trade under the symbol CRWV. The CoreWeave IPO was underwritten by a syndicate of 18 banks, including Morgan Stanley, JP Morgan, and Goldman Sachs.