AI startup CoreWeave downsizes US IPO

FE Team | Published: March 28, 2025 23:40:26

CoreWeave reduced the size of its US initial public offering and priced its shares below the indicated range, the AI startup said on Thursday, dampening expectations that the listing would boost investor appetite for IPOs, reports Reuters.
The Nvidia-backed company is now looking to sell 37.5 million shares, 23.5% less than originally planned, and price them at $40 apiece, well below even the lower end of the indicated range.
CoreWeave will offer 36.6 million of those shares while existing stockholders will sell 910,000 shares.
Nvidia will anchor the CoreWeave IPO at the price with a $250 million order, a person familiar with the matter told Reuters earlier on Thursday.
The sale would raise about $1.5 billion and value CoreWeave at about $23 billion on a fully diluted basis, according to Reuters' calculations.
CoreWeave's roadshow, which began last week, received a weaker-than-expected reception as risk-averse investors in a volatile market weighed concerns over the company's long-term growth, financial risks and capital intensity, according to four sources familiar with the matter.
Among the concerns is CoreWeave's heavy reliance on Microsoft, whose shifting AI datacenter strategy could impact long-term demand for chips known as graphics processing units, or GPUs. 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.
Additionally, CoreWeave's capital-intensive business model raises questions about sustainability, adding to broader market uncertainty.
CoreWeave has been a significant customer for Nvidia, deploying over 250,000 of Nvidia's GPUs by the end of 2024. Investors' lukewarm reception to the CoreWeave IPO could signal reduced confidence in the AI infrastructure market, as the scaling of GPU assets in AI training slows down.
"The business model doesn't appear fundamentally flawed, but this suggests investors are recalibrating AI infrastructure valuations," said Lukas Muehlbauer, research analyst at IPOX.
CoreWeave and some existing investors had initially aimed to sell 49 million shares in the offering priced between $47 and $55 each to raise as much as $2.7 billion. That would have valued the company at up to $32 billion on a fully diluted basis.
CoreWeave's stock market debut has been closely watched as a test of the strength of a recovery in the US IPO market and whether investor enthusiasm for AI newcomers remains strong or has started to wane.
The number of US-listed equity capital markets deals, including both IPOs and block trades of shares, fell to 187 in the first three months of this year, down from 243 during the same period last year, according to Dealogic data through Wednesday. The total value of these transactions also dipped, falling from $74.02 billion to $63.48 billion.
Ahead of its IPO, CoreWeave secured partnerships with major AI players, including Sam Altman's OpenAI. Earlier this month, it signed an $11.9 billion infrastructure deal with the ChatGPT maker.
The cloud services provider, which offers access to data centers and high-powered Nvidia chips for AI workloads, will also issue $350 million in shares to OpenAI through a private placement as part of the offering.
Morgan Stanley, J.P. Morgan and Goldman Sachs are the lead underwriters of the IPO.