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CoreWeave’s IPO Faces Initial Challenges as Stock Plummets

CoreWeave, the Nvidia-supported provider of cloud services for artificial intelligence, has encountered difficulties following its recent initial public offering (IPO) on March 28, 2025. After listing shares at $40, the stock dropped nearly 10% on its first trading day, opening at $39 and ending the day at $40 — a significant decline below the offering price.

This IPO was notable as it marked the largest tech debut since 2021 and represented the first standalone AI company to enter the public markets. It successfully raised $1.5 billion during the offering, making it the most substantial IPO in the U.S. since automation software firm UiPath launched at $1.57 billion two years earlier.

CoreWeave’s public entry posed a critical test for a sluggish IPO market, which has seen a steep decline since early 2022, influenced by inflation and increasing interest rates, leading investors to pull back from riskier investments. Despite anticipations that a favorable political climate under President Donald Trump might revive the IPO scene, the introduction of new tariffs and resultant economic uncertainty have dampened investor appetite for technology equities. The Nasdaq Composite Index, which heavily features technology companies, is down by over 10% year-to-date, illustrating a challenging environment for tech firms.

Previously, CoreWeave had targeted a share price between $47 and $55, which would have generated$2.5 billion at the midrange; however, the offering was downsized to 37.5 million shares from an initial 49 million due to prevailing market conditions. CEO Michael Intrator acknowledged the obstacles the company faced when he stated on CNBC’s “Squawk Box,” “There’s a lot of headwinds in the macro…and we definitely had to scale or rightsize the transaction for where the buying interest was.”

CoreWeave’s business model centers around providing access to extensive networks of Nvidia graphics processing units (GPUs) for prominent tech enterprise clients, including Meta, IBM, and Cohere. Microsoft’s partnership has been particularly crucial, as it represents a substantial 62% of the company’s revenue from the past year, placing CoreWeave in close competition with giants such as Amazon, Google, and Oracle.

Founded in 2017 as Atlantic Crypto, CoreWeave transitioned from cryptocurrency mining infrastructure to focus on AI technologies, capitalizing on the increased demand for GPU resources as digital asset values declined. According to its prospectus, filed earlier this month, the company’s revenues surged over 737% to reach $1.92 billion in the previous year; however, it also reported a significant net loss of $863 million during the same period.

As CoreWeave navigates these initial setbacks, it becomes part of a larger narrative in the tech sector where numerous companies, including Klarna and ticket reseller StubHub, are gearing up for public offerings in what is becoming an increasingly scrutinized IPO landscape.

Source
www.cnbc.com