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Michael Intrator, the founder and CEO of CoreWeave Inc., a leading provider of cloud services backed by Nvidia, marked a significant milestone for his company with the IPO at Nasdaq on March 28, 2025.
Brendan McDermid | Reuters
Following a lengthy wait, Wall Street banks finally celebrated a billion-dollar IPO from a U.S. tech company, but the financial benefits from this offering have proved modest.
CoreWeave’s initial public offering (IPO) on Friday raised $1.5 billion, but the underwriting expenses, including commissions and discounts, were notably low at just 2.8% of the total proceeds. As indicated in a recent filing with the Securities and Exchange Commission, this means underwriters received $42 million from the offering.
This percentage is below historical averages. Since Facebook’s landmark IPO in 2012, there have been 25 tech-related venture-backed IPOs in the U.S. that raised at least $1 billion, with an average underwriting fee of around 4%, as reported by data from FactSet. Facebook, on record for raising $16 billion, paid out the smallest percentage at just 1.1%.
Morgan Stanley led the CoreWeave IPO and held the prized position of lead underwriter, followed by JPMorgan Chase and Goldman Sachs—three firms well-known for their leadership in tech IPOs. They anticipated a resurgence in the tech market following a downturn attributed largely to inflation and rising interest rates, which stunted new offerings since late 2021.
Unfortunately for these banks, CoreWeave’s early trading performance did not instill confidence in a market recovery. After reducing its price from an anticipated range of $47 to $55 to $40, the company saw its stock fall by 7% to $37.20 in its first trading sessions following the IPO.
The decline can be attributed to broader market trends, but specific apprehensions about CoreWeave also loom large. Investors are particularly wary of the company’s reliance on Microsoft as a major customer, its substantial debt load, and the long-term viability of its model that centers around reselling Nvidia’s technology.
CoreWeave’s IPO marks the first instance of a venture-backed company raising over $1 billion since Freshworks achieved this feat in September 2021. Freshworks incurred an underwriting fee of 5.3%, while UiPath, which went public a few months earlier, encountered a fee of 5%. The last instance of a billion-dollar IPO with a lesser fee than CoreWeave’s was AppLovin, which had a 2.6% fee in April 2021.
In more recent offerings that raised below $1 billion, the underwriting fees were significantly higher. Companies such as Instacart and Klaviyo in 2023, as well as Reddit, Astera Labs, Rubrik, and ServiceTitan in the previous year, faced fees of at least 5%.
In terms of share allocations for the CoreWeave deal, Morgan Stanley received the highest at 27%, JPMorgan was allocated 25%, and Goldman Sachs secured 15%. These allocations often reflect the corresponding fees each bank collects, with the lead bank typically receiving a marginally larger percentage for management fees.
David Golden, a partner at Revolution Ventures and a former leader of tech investment banking at JPMorgan, noted that there is an element of opacity in underwriting compensation that is not detailed in the prospectus. He estimated that Morgan Stanley likely earned at least $13 million from this deal, representing over 30% of the total payout, while Goldman Sachs may have received slightly more than $6 million.
Requests for comment from representatives of Morgan Stanley and Goldman Sachs went unanswered, while a spokesperson for JPMorgan did not respond immediately.
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