CoreWeave, cloud computing company, became the first major publicly released artificial intelligence startup, and when it submitted its public listing documents earlier this month, it was a sign of optimism in the rocky market of IPOs
However, optimism has waned as New Jersey-based CoreWeave significantly reduced the size and value of its offering on Thursday. The company plans to price the stock at $40 when it opens on Friday, following a recent estimate that the stock will be priced at $47 to $47 to $55 when it opens on Friday.
Initially, it was expected to raise about $4 billion at a $35 billion valuation, but the company attempted to raise $1.5 billion on Friday, valued at $19 billion.
The decline in offerings is a sign of a slump stock market, clouded by inflation and uncertainty about President Trump's tariffs. And it reflects broader concerns about AI developments over the slowdown of the economy as Nvidia's stock, a Coreweave investor and has fallen 7% since Wednesday.
“It was a cruel time for the market in general,” said Samuel Kerr, head equity capital market analyst at financial insights firm Mergermarket. “This shows that there is little desire to propose this type of risk transaction at this time.”
CoreWeave will be the first major AI company to be published, but this is not a true Litmus test of AI products. This falls into the standard startups in industries such as Openai and Anthropic, the makers of chatbots popular with millions of users.
Also, CoreWeave has “a lot of peculiarities that make it a difficult IPO candidate,” Kerr said, including the enormous debt needed to build a new data center and the unusual background as a cryptocurrency mining company.
“It's not particularly intelligent to use it as a precursor to all AI,” Kerr added.
CoreWeave was founded in 2017 by Michael Intrator as a cryptocurrency mining startup. Brian Venturo; Brannin McBee is three former merchandise traders currently the company's top executives. Since its inception, CoreWeave has been building its business around Nvidia graphics processing units, or GPUs, which are powerful computer chips that can analyze huge amounts of data.
When crypto prices crashed in 2019, CoreWeave doubled its stockpile of strong chips and bought a huge amount from the tormented crypto companies. After Openai released Chatbot ChatGpt in 2022, CoreWeave shifted to using chips for AI development.
As a public company, CoreWeave offers a new glimpse into the profitability of the cloud computing and AI industries. That revenue rose to $1.9 billion from $229 million last year, but it has not yet made any profits. Last year, it spent nearly $1 billion to fund its debt.
The company is based in a suburban office park in Livingston, New Jersey, and promotes its relationships with well-known California companies such as CoreWeave investors Nvidia and Openai.
CoreWeave has raised $2.3 billion in venture capital funding, valued at $19 billion last year in the private market. Intrator, Venturo and McBee own about 30% of the company, with special classes of shares giving them about 80% of the voting rights.
CoreWeave's biggest investor is hedge fund magnetor, which invested $50 million in a young cloud computing startup in 2021. He owns approximately 25% of the shares. Nvidia, which supplies most of CoreWeave's chips, owns a 4% stake.
Morgan Stanley, JPMorgan and Goldman Sachs managed the IPO
