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Investing.com -- CoreWeave priced its IPO Thursday evening, and as expected, the pricing was lackluster.
The AI cloud service provider priced 37.5 million shares at $40, 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 and $55, which could have raised as much as $2.695 billion.
CoreWeave’s IPO is expected to open today on the NASDAQ under the ticker “CRWV.”
The IPO is being led by Morgan Stanley (NYSE:MS), JP Morgan, and Goldman Sachs (NYSE:GS).
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 jump, 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, CoreWeave’s largest customer, pulled out of data center leases in the U.S. and Europe.
Earlier this week, TD Cowen analyst Michael Elias said that Microsoft (NASDAQ:MSFT) had 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 had both deferred and canceled existing data center leases in both the U.S. and Europe in the last month.
While the decision was primarily 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.
While Microsoft potentially pulls back, another critical partner is trying to help the company.
NVIDIA (NASDAQ:NVDA), a trusted partner and GPU provider of CoreWeave, is reportedly buying $250 million in stock in the IPO.
The IPO for CoreWeave is seen opening on Wall Street later today, sometime between 11 AM ET - 2 PM ET. It remains to be seen if the lower price and fewer shares being offered will be enough to drive demand for the stock.
