Wall Street Banks See Meager Payout from CoreWeave’s IPO Debut

CoreWeave, a cloud services provider backed by Nvidia, made its highly anticipated Nasdaq debut on March 28, 2025. But for the Wall Street heavyweights that underwrote the initial public offering, the financial rewards were far less than expected. Despite being the largest venture-backed tech IPO for a U.S. company since 2021, the payout to the banks amounted to just 2.8% of the total proceeds — a historically low fee.

A Low Payout for Wall Street’s Heavy Hitters

CoreWeave’s IPO raised $1.5 billion, but the fees paid to its underwriters totaled only $42 million. This equates to just 2.8% of the total raised, a stark contrast to the usual payouts in the industry. According to a filing with the Securities and Exchange Commission (SEC) on March 31, the percentage is on the low end of the spectrum for tech IPOs that have raised over $1 billion. The average underwriting fee for similar offerings since Facebook’s 2012 IPO stands at around 4%, with some past deals even surpassing that.

For reference, when Facebook went public in 2012, it paid out the lowest percentage of fees ever recorded, at just 1.1% of its $16 billion offering. Even though CoreWeave’s fee is considerably higher than Facebook’s, it’s still notably low in comparison to the historical average.

Morgan Stanley, JPMorgan Chase, and Goldman Sachs led the underwriting team for CoreWeave’s IPO. These three banks are familiar faces when it comes to handling tech IPOs, and they’ve been eagerly anticipating a revival of the market. CoreWeave was seen as a key indicator of a potential resurgence after a two-year lull in the IPO space. Inflation and rising interest rates had stalled many new offerings in the tech sector.

But the financial payoff from CoreWeave’s IPO hasn’t matched the expectations of its underwriters.

Early Trading Paints a Grim Picture for CoreWeave

Investors were hoping for a strong start when CoreWeave made its debut on the Nasdaq, but the numbers haven’t been promising. The company, which specializes in providing AI infrastructure services, was forced to lower its offering price range from $47–$55 per share to $40 ahead of the launch. Even with the price cut, CoreWeave’s stock opened with no immediate gains on Friday, and by Monday, it had dropped 7% to $37.20 per share.

This poor performance in the early stages of its IPO raises questions about the viability of the business model. CoreWeave has major reliance on Microsoft as a customer, which, while a strong partnership, also poses risks. Additionally, the company carries a hefty debt load, which only adds to concerns over its long-term sustainability. Perhaps most notably, CoreWeave’s business model, which revolves around reselling Nvidia’s technology, could be subject to market fluctuations and increased competition. These factors have contributed to investor uncertainty, further dampening the IPO’s reception.

A Troubling Trend for Tech IPOs

CoreWeave’s lackluster debut is part of a broader trend of disappointing performances for tech IPOs in recent years. Since the end of 2021, there has been a significant slowdown in the IPO market due to macroeconomic challenges like inflation and rising interest rates. CoreWeave’s offering, despite being one of the largest in recent memory, has failed to inspire investor confidence.

Interestingly, CoreWeave is the first venture-backed company to raise over $1 billion since Freshworks in September 2021. Other tech IPOs from that period, such as UiPath and Freshworks, offered much higher underwriting fees, closer to 5%, with Freshworks carrying a 5.3% fee. On the other hand, CoreWeave’s 2.8% payout stands out as an anomaly in this category.

This raises the question: why did CoreWeave’s underwriters accept such a low payout? While the company’s IPO was meant to signal the revival of the tech sector, the performance so far casts doubt on whether Wall Street’s optimism about a rebound was premature. The lower underwriting fee suggests that the banks were trying to ensure a successful offering despite the lack of investor enthusiasm.

Comparison with Other Recent IPOs

The decline in CoreWeave’s stock price isn’t just a one-off case. Several other IPOs launched in the last couple of years, though smaller in size, have seen substantial payouts to their underwriters. Companies like Instacart, Klaviyo, and Reddit all raised less than $1 billion but carried underwriting fees of at least 5%, which highlights how challenging it has been for companies to find success in the market.

It’s worth noting that the IPO landscape is currently more cautious. With inflation fears, high interest rates, and growing investor skepticism, tech companies looking to go public have faced more scrutiny than ever. As a result, underwriting fees remain elevated for smaller deals, while the larger offerings like CoreWeave’s raise questions about market conditions.

Table: Comparison of Recent Tech IPO Underwriting Fees

It’s becoming clear that banks are treading carefully in these uncertain times. While CoreWeave’s IPO was supposed to be a flagship offering for tech, it’s now seen as a cautionary tale for future IPOs in the sector.