CoreWeave’s stock has experienced a remarkable 41% surge in just one day, followed by an additional 11% increase to $58.60 on Wednesday. The company’s initial public offering (IPO) was met with muted reception, but it has now garnered significant attention from investors.
CoreWeave priced its IPO at $40 per share, valuing the company at $23 billion. The firm had initially planned to raise $4 billion, but concerns about AI spending and its business model led to a downsized offering. Nvidia invested in CoreWeave early on and helped anchor the IPO at $40.
The company raised $1.5 billion for this valuation. CoreWeave provides access to data centers and high-powered chips for AI workloads, competing with major cloud providers like Microsoft and Amazon. Despite concerns about its business model, financial results have been solid, with sales rising to $1.9 billion last year.
However, risks persist, including the use of large amounts of debt to fund purchases of depreciating assets. CoreWeave has raised $14.9 billion in debt and equity across 12 financings. The company also relies heavily on Microsoft for 62% of its sales, which could be a concern if orders from Microsoft’s competitor OpenAI were to cancel.
As the AI industry continues to grow, investors are closely monitoring CoreWeave’s performance. Analyst Gil Luria predicts that the company will be added to various AI baskets, driving further market action.
Source: https://finance.yahoo.com/news/coreweave-stock-rips-higher-after-muted-ipo-144723161.html