Unhedged What does CoreWeave’s IPO say about the market?
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Mar 27, 2025 
Join John Foley, a Lex editor with deep insights into the tech industry, and Rob Smith, the Financial Times' corporate finance expert, as they dive into CoreWeave's unique approach to the IPO landscape. They explore how the company evolved from crypto mining to AI capacity renting, leveraging NVIDIA chips. Discussions reveal the complexities of CoreWeave's financial dynamics, including its risky debt and client relationships, while also touching on investment strategies in the wake of market uncertainties and automotive tariff changes.
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CoreWeave's Business Model
- CoreWeave's business model involves buying NVIDIA chips and renting them out, raising questions about its profitability.
- It faces challenges like low margins, high debt, and dependence on a few key customers like Microsoft.
CoreWeave's Debt
- CoreWeave's profitability is significantly affected by its cost of financing, especially given its high debt.
- Its debt structure is complex and includes a substantial amount to be repaid soon.
Customer Concentration Risk
- CoreWeave depends heavily on a small number of customers, mainly Microsoft and OpenAI.
- While Microsoft is a reliable customer, OpenAI presents higher counterparty risk.