CoreWeave CEO calls IPO a "victory" despite shrunken size
Why it matters: The offering was seen as a bellwether, both for the health of the IPO market and the AI infrastructure segment — which has seen dramatic growth, but also hints that capacity may be getting ahead of demand.
Driving the news: CoreWeave, which rents the graphics chips needed to run many AI tasks, started trading Friday after selling 37.5 million shares at $40 a piece.
It raised $1.5 billion — over $1 billion less than it had recently been targeting.
The shares closed flat at $40 Friday afternoon.
"The company's first day issues are perhaps no surprise given heavy losses on the Nasdaq, but it marks a difficult moment for the US, and global, IPO market given the profile of the deal and the hope that surrounded it," Samuel Kerr, head of equity capital markets at Mergermarket, wrote in a note.
What they're saying:"It would be silly to say we didn't want it to go larger or we didn't want [the stock price] to go higher," CEO Mike Intrator told Axios. But, he said, going public is key to having reliable access to the consistent funding the company needs to build out the computing infrastructure that clients are after.
"Some people, they need more time to understand what is a fundamentally different business model," he said, noting that CoreWeave's business is more capital-intensive than many other kinds of tech companies.
"We go out and we win a contract and then we go out into the debt lending syndicate and marry up those two contracts so there is an accretive contract that can pay off the debt. You can scale the business to enormous size."
Yes, but: There have been mixed signals on the demand for that kind of AI infrastructure, with reports Microsoft is scaling back its plans with CoreWeave, and for its own data centers.
Intrator acknowledged that "there is a narrative out there that there is too much capacity" but said that's not what he is seeing.
"I continue to be in a position where I am unable to build enough infrastructure to deliver enough computing to sate the clients," he said. "I am sold out. I have been sold out and I'm not allowed to talk about what's coming next, but there is no indication that is going to ease up."
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