CoreWeave stock whimpers in IPO debut

Investing.com -- Today’s IPO for CoreWeave (NASDAQ: CRWV) opened for trading at $39 on Wall Street after pricing its lackluster deal at $40 per share. Shares have since stabilized, last trading up 2.4% to $40.95.

The AI cloud service provider priced 37.5 million shares, raising $1.5 billion in total for the company and selling shareholders. This was substantially below the original plan to sell 49 million shares between $47-$55, which could have raised as much as $2.695 billion.

Half of the $1.5 billion raised in the deal came from three buyers, Bloomberg News reported on Friday. Further, the top 15 investors took 90 percent of the shares.

NVIDIA (NASDAQ: NVDA), which is a trusted partner and GPU provider of CoreWeave, was said to have bought $250 million in stock to anchor the IPO.

The IPO was led by Morgan Stanley, JP Morgan, and Goldman Sachs.

Financially, the company posted some impressive numbers in 2024. Revenue surged 737% to $1.9 billion as demand for the company’s AI services skyrocketed. However, despite the revenue surge, the company still posted a net loss of $0.9 billion for the year.

The weak demand for the offering could be related to fears that the demand for its AI data centers has peaked.

These fears were heightened recently on speculation that Microsoft (NASDAQ: MSFT), CoreWeave’s largest customer, pulled out of data center leases in the U.S. and Europe.

TD Cowen analyst Michael Elias said earlier this week that Microsoft walked away from +2GW of capacity in both the U.S. and Europe in the last six months that was in the process of being leased and has both deferred and canceled existing data center leases in both the U.S. and Europe in the last month.

While the decision was largely driven by the decision not to support incremental Open AI training workloads, the analyst believes that the lease cancellations and capacity deferrals indicate an oversupply of data centers.

Microsoft accounted for 62% of CoreWeave’s 2024 revenue.

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