By Adam Levine
CoreWeave, a hotly anticipated initial public offering candidate, is seeking to go public with a valuation ranging from $27 to $32 billion, according to a new filing from the cloud start-up.
At the midpoint of that range, the company, which plans to list on the Nasdaq under the ticker CRWV, would be valued at 16 times 2024 sales and 92 times operating profit.
That's a hefty valuation by most metrics. The S&P 500 currently fetches 2.8 times sales; the Nasdaq Composite trades at 3.9 times sales.
But public companies are growing revenue at a much slower rate than CoreWeave's latest annual rate of 737%. That rate is likely unsustainable, but it helps explain why the company is seeking such a high valuation in what is shaping up to be a slow year for IPOs.
One historical comparable for investors to consider is Snowflake, which made its debut in the hot IPO market of late 2020. At the time, the cloud firm was growing revenue at 174% a year. The company's IPO was priced at 20 times sales.
According to Jay Ritter, a finance professor at the University of Florida Warrington College of Business , the median price-to-sales ratio for tech IPOs in the last 10 years varied from 4.2 in the slow IPO year of 2016 to 15.2 in the brisk 2021 market, when 121 tech companies went public.
Those figures still pale in comparison to IPOs during the heyday of the dot-com bubble. In 1999, there were 370 tech IPOs. They went public with a median price-to-sales figure of 27.
CoreWeave's IPO is expected to price as early as next week.
Write to Adam Levine at adam.levine@barrons.com
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March 21, 2025 14:22 ET (18:22 GMT)
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