The smaller IPO, set to price Thursday and trade as 'CRWV' on Nasdaq, tests a cooling U.S. market amid uneven data center spending and competition from rivals like China's DeepSeek, dimming hopes for a broad listing recovery.
Reuters reports that CoreWeave, a cloud services company backed by Nvidia (NVDA), is scaling back its big debut on the U.S. stock market. Instead of selling 49 million shares at $47 to $55 each to rake in up to $2.7 billion, it's now planning to offload just 37.5 million shares at $40 apiece, bringing in about $1.5 billion. This move, the report notes, values the company at $23 billion when you factor in all possible shares, a far cry from the $32 billion it could've hit at the higher range -- or even the $35 billion it dreamed of last November. Nvidia's still in the game, throwing down $250 million to anchor the deal, but the smaller size and lower price are raising eyebrows about whether the excitement for AI startups is cooling off.
This IPO was supposed to be a litmus test for the U.S. market, showing if investors were ready to jump back into new listings, especially for AI-driven companies like CoreWeave, which rents out data centers and Nvidia's powerful chips for heavy-duty AI tasks. But there's trouble brewing beneath the surface. The company's carrying a hefty $8 billion in debt from last year, plus $2.6 billion in leasing costs since it doesn't own its 32 data centers or some of its gear. It's never made a profit either, and that's a red flag for investors who've been burned by unprofitable newcomers lately. Of the $1.5 billion it's now set to raise, $1 billion is earmarked to chip away at that debt, though CoreWeave says it'll keep borrowing to fuel its growth.
Despite the downsizing, CoreWeave has some big wins in its corner. It locked in an $11.9 billion deal with OpenAI, the folks behind ChatGPT, earlier this month, and as part of the IPO, it's handing over $350 million in shares to them in a side deal. That's a solid vote of confidence from a major AI player. Still, the market's not as forgiving as it once was. Analysts had hoped a blockbuster CoreWeave IPO would kickstart a wave of new listings, but with rivals like China's DeepSeek cutting costs and data center spending looking shaky - favoring giants over smaller fry like CoreWeave - the mood's shifting. The company, which started as a crypto miner back in 2017, is now set to trade on Nasdaq as 'CRWV,' with heavyweights like Morgan Stanley, J.P. Morgan, and Goldman Sachs steering the ship. Semafor broke the news of the cutback on Thursday, and the final pricing's expected later today -- proof that even in the AI boom, not every bet pays off as big as planned.