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CANADA - 2025/03/19: In this photo illustration, the CoreWeave logo is seen displayed on a ... More smartphone screen. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images
CoreWeave (CRWV) is expected to start trading Friday March 28. At the midpoint of its IPO price range, $51/share, CoreWeave earns an unattractive Stock Rating.
While CoreWeave’s expected $27 billion valuation is lower than the previously reported $35 billion target, it remains much too high.
CoreWeave leases GPUs, CPU’s, and equipment within data centers to customers. Its solutions, connected via “proprietary software and cloud services”, allow customers to deploy and develop artificial intelligence (AI) workloads. With booming revenue growth, CoreWeave and its bankers are looking to capitalize on the AI hype – the same market narrative that’s driven many other AI and AI-related stocks to great heights.
However, in my view, CoreWeave’s IPO looks more like a plan to boost Wall Street insider bonuses and throw a lifeline to a cash-burning business, rather than the launch of the next NVIDIA.
The company faces persistent threats, not just from ever-changing/upgrading technology, but also from its own customers. Plus, the current proposed $27 billion valuation is far too high as it implies that CoreWeave will grow revenue at a 30% compounded annual growth rate for 7 years, while also maintaining tech-like margins, a highly unlikely feat.
Add in that the company hides 200% of its debt off balance sheet, presents misleading profits, has weak internal controls, offers almost no voting rights to IPO investors, and the risks to potential IPO investors become crystal clear.
Below, I’ll detail these risks and use my reverse discounted cash flow (DCF) model to prove the current valuation is too expensive.
My firm’s IPO research provides investors with an alternative to the popular narratives on IPOs that is based on more reliable fundamental research.
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