Wall Street Banks Disappointed by CoreWeave's IPO Payout

Michael Intrator, founder and CEO of CoreWeave Inc., a cloud services provider backed by Nvidia, was present at his company's IPO at the Nasdaq Market in New York City on March 28, 2025.

Wall Street banks have waited over three years for a billion-dollar IPO from a U.S. tech company, but the returns from CoreWeave's initial public offering have been disappointing.

CoreWeave, which recently entered the Nasdaq trading arena, raised $1.5 billion, but the fees for underwriters were very low, amounting to only 2.8% of the total proceeds. This translates to just $42 million out of the total raised being earned by the underwriters, according to a filing made with the Securities and Exchange Commission.

This fee percentage is considerably less than the historical average. Since Facebook's record IPO in 2012, 25 venture-backed tech IPOs in the U.S. have garnered at least $1 billion, with an average underwriting fee of around 4%. Interestingly, Facebook, which raised $16 billion, had the lowest payout at 1.1%.

Leading the underwriting team for CoreWeave was Morgan Stanley, followed by JPMorgan Chase and Goldman Sachs, which are typically among the top bidders for tech IPOs. These banks were hoping for a market resurgence after a slowdown that began in late 2021 due to high inflation and rising interest rates.

However, CoreWeave's stock performance in its early trading days did not inspire much optimism about a market resurgence. After reducing its initial price offering from a range of $47 to $55 to $40, the stock saw no gains on opening day and fell further by 7% to $37.20 on the following Monday.

Market declines have affected CoreWeave's stock, but there are also investor concerns regarding the company. Issues include its heavy reliance on Microsoft as a customer, significant debt, and the viability of a business model that primarily involves reselling Nvidia's technology.

CoreWeave's IPO is noteworthy as it is the first venture-backed company to raise $1 billion or more since the Freshworks IPO in September 2021. Freshworks had an underwriting fee of 5.3%, and UiPath, which went public shortly before it, paid 5%. Prior to CoreWeave, the last billion-dollar offering with a lower fee was AppLovin's, which had a fee of 2.6%.

In comparison, several more recent IPOs, collecting less than $1 billion, had higher fees, including Instacart and Klaviyo in 2023, as well as Reddit, Astera Labs, Rubrik, and ServiceTitan the previous year, all of which paid at least 5% in fees.

For the CoreWeave deal, Morgan Stanley secured the largest share allocation to its clients at 27%, followed by JPMorgan with 25%, and Goldman Sachs with 15%. These share allocations are frequently indicative of the fee distributions among the banks, with a slightly higher share retained for the lead underwriter.

David Golden, a partner at Revolution Ventures and former tech investment banking head at JPMorgan, noted a lack of transparency in underwriting compensation that is not detailed in the IPO prospectus. Based on his experiences, he estimated that Morgan Stanley would earn at least $13 million from the deal, making up about 30% of the total payout, while Goldman Sachs would receive approximately $6 million.

Representatives from Morgan Stanley and Goldman Sachs chose not to comment, and a spokesperson for JPMorgan was unavailable for immediate response.

Banking, IPO, Technology