CoreWeave's shares are set to make a strong debut on the Nasdaq today, March 28, 2025, with indications suggesting an opening price nearly 18% above its initial offering price. The Nvidia-backed AI infrastructure firm is expected to launch at $47 per share, compared to its IPO price of $40, potentially valuing the company at $27.4 billion on a fully diluted basis. This positive start is particularly significant given the challenges the company faced leading up to its public offering.
Just a day prior, on March 27, CoreWeave had to downsize its initial public offering due to weak demand among investors. Originally, the company set its IPO price between $47 and $55 per share, but as interest waned, it adjusted the final price to $40. Despite this adjustment, the IPO is still poised to raise approximately $1.5 billion, marking the largest U.S. technology share sale since 2021.
CoreWeave is known for providing access to Nvidia graphics processing units (GPUs), essential for artificial intelligence training and workloads. The company has made headlines not only for its IPO but also for its significant contracts, including a recent agreement with OpenAI worth up to $11.9 billion over five years. This contract, along with Nvidia's $250 million order for CRWV stock at the IPO price, underscores the confidence major players have in CoreWeave's future.
However, the company’s reliance on a small number of clients raises concerns. A staggering 77% of CoreWeave's revenue last year came from its top two customers, with Microsoft being the largest. This dependency has sparked worries among investors about the long-term sustainability of the company, especially as Microsoft shifts its AI data center strategies. According to Kamran Ansari, managing partner at Kapital Ventures, "I don't know how receptive the market's going to be," highlighting the uncertainty surrounding CoreWeave's future.
Additionally, CoreWeave's capital-intensive business model has led to questions about its sustainability. As of last year, the company reported around $8 billion in debt, with plans to allocate about $1 billion of its IPO proceeds to pay down that debt. CoreWeave also leases its 32 data centers and some equipment instead of owning them, resulting in operating lease liabilities totaling $2.6 billion. While investors seem comfortable with the company's high leverage due to its strong free cash flow, the risk of unmet commitments remains a concern.
The stock's anticipated strong opening is seen as a critical moment for the U.S. IPO market, which has struggled since early 2022 amid high inflation and rising interest rates. Samuel Kerr, head of equity capital markets at Mergermarket, remarked, "The U.S. IPO market is at an inflection point. This next batch of deals will determine whether the U.S. IPO momentum continues through the second quarter, or whether issuers decide the risk now isn't worth it."
Investors are closely watching CoreWeave's debut as it could signal whether other companies will feel confident enough to pursue IPOs in the current economic climate. Recent weeks have seen signs of thawing in the IPO market, with companies like online lender Klarna and ticket reseller StubHub announcing plans to go public. Last year, social media company Reddit successfully held its IPO, raising $750 million, suggesting that there is still appetite for new public offerings.
As CoreWeave prepares to trade under the ticker symbol “CRWV,” the company’s performance will be a litmus test for the broader tech sector and its recovery trajectory. With AI-related firms like Nvidia and Microsoft enjoying soaring valuations, CoreWeave’s debut could either reinforce that trend or serve as a cautionary tale for investors wary of overextension in the AI space.
In summary, while CoreWeave's IPO represents a significant milestone for the company and the U.S. tech market, it also encapsulates the broader uncertainties and challenges facing the industry. As the debut unfolds, all eyes will be on how the stock performs and what that means for future IPOs in a climate still grappling with the aftereffects of economic instability.
