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CoreWeave (CRWV) is facing challenges from pricing its initial public offering (IPO) below the expected range, which raises concerns about its debt-heavy business model and the future of the artificial intelligence (AI) market.
Yahoo Finance Executive Editor Brian Sozzi joins Catalysts to discuss these issues live from the Nasdaq (^IXIC).
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
I do want to turn now to CoreWeave's IPO, the next big test for big tech offerings. The company already off to a shaky start, pricing its shares below the expected range. Want to get a vibe from the floor. So for that, we will send it over to Yahoo Finance executive editor Brian Sozzi. He is at the NASDAQ for CoreWeave's IPO. Brian, so excited to get your take because you're on the floor for us. Tell us what's going on down there.
Maddie, good to see you here. Yeah, you know, I think one thing that's getting lost in the sight of this underpricing of the CoreWeave IPO is that this is going to impact a lot of humans. And right below me is where, uh, the folks that have their IPOs come to the NASDAQ at least, ring the opening bell. CoreWeave rang that opening bell. And family members and the executive team have been taking photos here for the past half hour. So you could feel the excitement in the air. These are folks, I'm sure that have put a lot of time and effort to bringing this company to the NASDAQ, to an IPO. And also a lot of them, I'm sure, have stock options. So this is could be a fundamentally transformational day for them in terms of, uh, financial, uh, financially, uh, speaking. But there's probably a couple reasons why we saw the underpricing. Of course, there's concerns about the AI trade, does it continue at the pace that would continue at last year? Have there been too much capacity built out? There's that. But there's still concerns around the business model of a CoreWeave. This is a company that has raised $14.5 billion and in debt and equity over the past, uh, or through 12 financings. With the $1.5 billion they're raising from this, Maddie, one billion will be used to pay down some of that debt. They, of course, have used that debt to buy chips, build out their data centers. But the question is, when the economy slows down or if the AI trade does not work, what happens to all of this debt? So it is a risky business model that is called the neo-cloud business model. So there's a lot going on here. I would argue, Maddie, this is not necessarily a pure play AI trade, even though you have had NVIDIA as a major investor in the company. They have also backstopped this IPO at the $40 price. Uh, but all in all, looking forward to that opening trade, uh, on the, uh, on the NASDAQ for CoreWeave. And I will just give a quick plug, Maddie, too, for this. If you want some more details on CoreWeave, of course, go read the S1, but pull up the private company data on Yahoo Finance. It's now live. You can see who runs the company, what they've been up to, and of course, the pre-market or pre-valuation before they came public.
And Sozzi, you've been all over this story for us. So also a plug for you, for our audience to look at your specific coverage of the CoreWeave IPO. Thanks so much for joining us, Sozzi. For more coverage of CoreWeave's IPO, you can stay tuned to Yahoo Finance. Brian Sozzi interviewing CoreWeave's co-founder and chief development officer live from the NASDAQ at 11:10 a.m. Eastern. You won't want to miss it.