Latest news with #SamuelKerr
CNBC
3 days ago
- Business
- CNBC
Shein's embattled IPO signals mounting troubles for fast fashion giant
Fast fashion giant Shein's troubles continue to mount after its much anticipated London initial public offering (IPO) reportedly hit a fresh roadblock. The e-commerce behemoth is now aiming for a Hong Kong listing after failing to receive approval from Chinese regulators for its much hyped London IPO, Reuters reported Wednesday. A London listing had been seen as a boon for the 16-year-old Chinese-founded company, providing international legitimacy and access to a deep and mature pool of Western investors. Analysts nevertheless said they were unsurprised by the move given ongoing scrutiny surrounding the firm. "We've always said that we thought Hong Kong would be a safer IPO option for Shein," Samuel Kerr, head of global equity capital markets at Mergermarket, told CNBC's "Squawk Box Europe" on Thursday. "For international investors, this was always going to be an IPO that had a lot of hair on it, and perhaps it's going to play better to a domestic audience," he added. Neither Shein nor Chinese regulator China Securities Regulatory Commission (CSRC) responded to CNBC's request for comment on the plans. Hong Kong Exchanges and Clearing Limited said it does not comment on individual companies. Shein has faced an uphill battle in its listing ambitions as it seeks to shake allegations over the use of forced labor to produce its $5 t-shirts and $7 shoes. While it vehemently denies the claims, Shein last year shifted its focus from a New York listing to London after facing continued pushback on such issues from U.S. lawmakers. Meanwhile, concern over its commercial practices prompted an EU investigation, which earlier this week found the company in breach of consumer protection laws, including the use of fake discounts, pressure selling and misleading shoppers over sustainability claims. The closure this month of the U.S.'s de minimis loophole for low cost goods — and possible similar measures by the EU and the U.K. — have only added to the company's woes. "The barrage of criticism, which looked set to intensify leading up to a London listing, is considered to be partly why Chinese regulators were reluctant to give the IPO the green light," Susannah Streeter, head of money and markets at Hargreaves Lansdown, wrote in a note Wednesday. Shein's proposed London listing was also seen as providing a much needed boost to the U.K.'s lackluster IPO market after a string of delistings and defections amid intense competition from other financial markets. "This will be a blow for London's ambitions to attract bigger names to list in the capital, but given the obstacles piling up, it's not surprising [that] the company seems to be veering off in another direction," Streeter said. Still, some expressed worry that positioning the controversial listing as the face of London's IPO revival could send the wrong signal to investors. "There was a bit of concern from some in London that Shein would be seen as a benchmark barometer for the future of the London Stock Exchange and for IPOs coming back to London. I think that would have been problematic," Kerr said. Additional scrutiny in the U.K. was also seen as piling pressure on Shein's valuation amid comparisons to other listed retail peers, such as Asos, Next and Boohoo. The company was already reportedly under pressure to cut its London listing valuation to around $30 billion, according to Bloomberg, down from a previously estimated $50 billion. "Going away from the U.K. and away from those U.K. peers will probably allow it to get a higher valuation," Kerr noted. Meantime, a Shein listing could market a further boon for Hong Kong in what is shaping up to be a strong year for the market following fresh flows of capital from on- and offshore investors. "It would have been a meaningful milestone for Shein to list in either London or New York, given the maturity, depth, and valuation potential of those markets," Rui Ma, founder and analyst at Tech Buzz China, told CNBC via email. "That said, markets are ultimately shaped by the quality of their listings and participants. Shein's listing is a win for Hong Kong — but not yet a turning point," she added. Shein investors CNBC spoke to declined to comment on the listing's reported relocation.
Axios
28-03-2025
- Business
- Axios
CoreWeave CEO calls IPO a "victory" despite shrunken size
The CEO of CoreWeave called the company's IPO an "unbelievable, overwhelming victory" despite selling fewer shares than originally intended at a lower price than hoped. Why it matters: The offering was seen as a bellwether, both for the health of the IPO market and the AI infrastructure segment — which has seen dramatic growth, but also hints that capacity may be getting ahead of demand. Driving the news: CoreWeave, which rents the graphics chips needed to run many AI tasks, started trading Friday after selling 37.5 million shares at $40 a piece. It raised $1.5 billion — over $1 billion less than it had recently been targeting. The shares closed flat at $40 Friday afternoon. "The company's first day issues are perhaps no surprise given heavy losses on the Nasdaq, but it marks a difficult moment for the US, and global, IPO market given the profile of the deal and the hope that surrounded it," Samuel Kerr, head of equity capital markets at Mergermarket, wrote in a note. What they're saying:"It would be silly to say we didn't want it to go larger or we didn't want [the stock price] to go higher," CEO Mike Intrator told Axios. But, he said, going public is key to having reliable access to the consistent funding the company needs to build out the computing infrastructure that clients are after. "Some people, they need more time to understand what is a fundamentally different business model," he said, noting that CoreWeave's business is more capital-intensive than many other kinds of tech companies. "We go out and we win a contract and then we go out into the debt lending syndicate and marry up those two contracts so there is an accretive contract that can pay off the debt. You can scale the business to enormous size." Yes, but: There have been mixed signals on the demand for that kind of AI infrastructure, with reports Microsoft is scaling back its plans with CoreWeave, and for its own data centers. Intrator acknowledged that "there is a narrative out there that there is too much capacity" but said that's not what he is seeing. "I continue to be in a position where I am unable to build enough infrastructure to deliver enough computing to sate the clients," he said. "I am sold out. I have been sold out and I'm not allowed to talk about what's coming next, but there is no indication that is going to ease up."
Yahoo
28-03-2025
- Business
- Yahoo
Nvidia-backed CoreWeave's shares likely to open up to 25% above IPO price
(Reuters) - CoreWeave's shares were set to open up to 25% above their offer price in the company's debut on the Nasdaq on Friday. The Nvidia-backed AI infrastructure firm's stock was indicated to trade at $50, compared with the IPO price of $40. At the higher end, it could notch a valuation of around $29 billion on a fully diluted basis. The first major AI startup to list in recent years suffered a setback on Thursday when it downsized its initial public offering. A strong debut would be a welcome sign, offering hope to other IPO candidates that smooth listings are achievable with tempered valuations, but a lackluster performance may deepen skepticism at a time when equity markets are already grappling with tariff-related turmoil. "The U.S. IPO market is at an inflection point. This next batch of deals will determine whether the U.S. IPO momentum continues through the second quarter, or whether issuers decide the risk now isn't worth it," said Samuel Kerr, head of equity capital markets at Mergermarket. The debut will also test the limits of the AI hype, given increasing frustration over Big Tech's massive spending spree and fears of competition from China's artificial intelligence startup DeepSeek. While investors have propelled AI-related companies such as Nvidia and Microsoft to stratospheric valuations, CoreWeave has stirred concerns among risk-averse investors. The company provides access to data centers and high-powered Nvidia chips, which have become the most sought-after resource in the race to develop AI applications. However, 77% of CoreWeave's revenue last year came from just its top two customers, including Microsoft. At its roadshow, some expressed worries about CoreWeave's heavy reliance on Microsoft as the tech behemoth's shifting AI data center strategy could impact long-term demand for chips. CoreWeave's capital-intensive business model also raised questions about sustainability, sources said. "I don't know how receptive the market's going to be," said Kamran Ansari, managing partner at Kapital Ventures, noting that while the growth of the company has been meteoric, its long-term sustainability is yet to be tested. CoreWeave had around $8 billion in debt as of last year. The company said earlier this month it plans to use about $1 billion of the IPO proceeds to pay down debt. It also leases its 32 data centers and some equipment instead of owning them, resulting in operating lease liabilities of $2.6 billion. While investors appear comfortable with the company's high leverage since it has strong free cash flow, the risk of commitments not being fulfilled remains a worry. The startup has also consistently posted losses, and IPO investors in the last few years have been wary of backing companies with no history of profitability. FROM CRYPTO TO AI Founded as an Ethereum-focused crypto miner in 2017, CoreWeave pivoted to AI a few years later. It shuttered its mining business after Ethereum's 2022 upgrade, "The Merge," slashed rewards for miners. It signed a five-year contract worth $11.9 billion with OpenAI in the lead-up to the IPO, forging ties with the most prominent startup in the industry. CoreWeave's revenue has also grown at a breakneck pace, climbing more than eight-fold last year. But it may need to do more to convince investors. "For most venture-backed deep tech startups, it's going to take more than hype to make it through the public markets right now," said Anthony Georgiades, founder and general partner at Innovating Capital. CoreWeave's shares are set to trade under the symbol "CRWV". The IPO was underwritten by a syndicate of 18 banks, including Morgan Stanley, and Goldman Sachs. Sign in to access your portfolio
Reuters
28-03-2025
- Business
- Reuters
Nvidia-backed CoreWeave's shares likely to open up to 25% above IPO price
March 28 (Reuters) - CoreWeave's (CRWV.O), opens new tab shares were set to open up to 25% above their offer price in the company's debut on the Nasdaq on Friday. The Nvidia-backed AI infrastructure firm's stock was indicated to trade at $50, compared with the IPO price of $40. here. At the higher end, it could notch a valuation of around $29 billion on a fully diluted basis. The first major AI startup to list in recent years suffered a setback on Thursday when it downsized its initial public offering. A strong debut would be a welcome sign, offering hope to other IPO candidates that smooth listings are achievable with tempered valuations, but a lackluster performance may deepen skepticism at a time when equity markets are already grappling with tariff-related turmoil. "The U.S. IPO market is at an inflection point. This next batch of deals will determine whether the U.S. IPO momentum continues through the second quarter, or whether issuers decide the risk now isn't worth it," said Samuel Kerr, head of equity capital markets at Mergermarket. The debut will also test the limits of the AI hype, given increasing frustration over Big Tech's massive spending spree and fears of competition from China's artificial intelligence startup DeepSeek. While investors have propelled AI-related companies such as Nvidia (NVDA.O), opens new tab and Microsoft (MSFT.O), opens new tab to stratospheric valuations, CoreWeave has stirred concerns among risk-averse investors. The company provides access to data centers and high-powered Nvidia chips, which have become the most sought-after resource in the race to develop AI applications. However, 77% of CoreWeave's revenue last year came from just its top two customers, including Microsoft. At its roadshow, some expressed worries about CoreWeave's heavy reliance on Microsoft as the tech behemoth's shifting AI data center strategy could impact long-term demand for chips. CoreWeave's capital-intensive business model also raised questions about sustainability, sources said. "I don't know how receptive the market's going to be," said Kamran Ansari, managing partner at Kapital Ventures, noting that while the growth of the company has been meteoric, its long-term sustainability is yet to be tested. CoreWeave had around $8 billion in debt as of last year. The company said earlier this month it plans to use about $1 billion of the IPO proceeds to pay down debt. It also leases its 32 data centers and some equipment instead of owning them, resulting in operating lease liabilities of $2.6 billion. While investors appear comfortable with the company's high leverage since it has strong free cash flow, the risk of commitments not being fulfilled remains a worry. The startup has also consistently posted losses, and IPO investors in the last few years have been wary of backing companies with no history of profitability. FROM CRYPTO TO AI Founded as an Ethereum-focused crypto miner in 2017, CoreWeave pivoted to AI a few years later. It shuttered its mining business after Ethereum's 2022 upgrade, "The Merge," slashed rewards for miners. It signed a five-year contract worth $11.9 billion with OpenAI in the lead-up to the IPO, forging ties with the most prominent startup in the industry. CoreWeave's revenue has also grown at a breakneck pace, climbing more than eight-fold last year. But it may need to do more to convince investors. "For most venture-backed deep tech startups, it's going to take more than hype to make it through the public markets right now," said Anthony Georgiades, founder and general partner at Innovating Capital. CoreWeave's shares are set to trade under the symbol "CRWV". The IPO was underwritten by a syndicate of 18 banks, including Morgan Stanley, and Goldman Sachs.
New York Times
28-03-2025
- Business
- New York Times
Is CoreWeave's Debut an Ill Omen for I.P.O.s?
The canary in the coal mine CoreWeave just pulled off the first big initial public offering this year — and the results were far from heartening. The company, which rents computing power to the artificial intelligence industry, shrank its I.P.O. far below initial expectations before Friday's anticipated trading debut. That's even after Nvidia, which owns a stake in the company, committed to buy more shares as part of the offering. The big question is whether CoreWeave's troubles speak to only one company — or to broader economic conditions, which would portend trouble for the embattled I.P.O. landscape as a whole. How far short did CoreWeave's I.P.O. fall? The company priced its offering at $40 a share, compared with an initial range of $47 to $55. It also sold 37.5 million shares, about 23 percent less than expected. Overall, it raised $1.5 billion at a roughly $23 billion valuation, down from its initial hopes of $4 billion at a $35 billion valuation. The company was battling tough I.P.O. conditions. The stock market has been weighed down by uncertainty around President Trump's tariffs and inflation. 'It has been a brutal time for markets in general,' Samuel Kerr, the head equity capital market analyst at the financial insights firm Mergermarket, told The Times. 'It shows you that there is very little appetite to put forward this kind of risk transaction at the moment.' CoreWeave was seen as a vanguard for A.I. initial offerings. It was founded as a cryptocurrency mining start-up in 2017, relying on Nvidia graphics processors that can analyze enormous amounts of data. When crypto prices crashed in 2019, CoreWeave rushed to stockpile the powerful chips, buying them from distressed crypto companies. After OpenAI released ChatGPT in 2022, the company pivoted to renting its chips via the cloud to A.I. developers. CoreWeave has raised $2.3 billion in venture capital funding and last year was valued at $19 billion in private markets. Its three founders, Michael Intrator, Brian Venturo and Brannin McBee, who still run the company, own around 30 percent of it. A special class of shares gives them around 80 percent of the voting power. But its financials in some ways underscore the challenges facing the A.I. industry. While CoreWeave's revenue jumped to $1.9 billion last year, up from $229 million a year earlier, it has yet to turn a profit — and spent nearly $1 billion last year to finance its debt. While the so-called Magnificent Seven of tech giants has enjoyed soaring stock valuations over the past few years, driven by Wall Street enthusiasm for A.I., investors have grown warier about the amount companies are spending on the technology. Shares in Nvidia, the core member of that group, are down 7 percent alone since Wednesday. Then again, how much of a litmus test is CoreWeave's I.P.O.? While the company is the first major A.I. business to go public, it doesn't represent the true titans of the field, makers of large language models like OpenAI and Anthropic. CoreWeave also 'has a lot of idiosyncrasies that make it a difficult I.P.O. candidate,' Kerr told The Times, including the huge amount of debt it took on to build new data centers and its unusual background as a cryptocurrency mining firm. (It also depends heavily on a small group of customers, including Microsoft, Meta and OpenAI.) Still, at a time companies are already skittish about going public amid market volatility, the downbeat offering doesn't give much assurance. Another giant law firm seeks to cut a deal with President Trump. Skadden, Arps, Slate, Meagher & Flom has held discussions with Trump advisers over how to avert a potentially devastating executive order targeting the firm after the president imposed similar moves on some of its rivals, The Times reports. That group now includes WilmerHale, a major Washington firm that once employed as a partner Robert Mueller III, who served as special counsel on the Trump-Russia investigation. A federal judge orders some Trump officials to preserve messages in the Signal leak. Judge James Boasberg, who has drawn impeachment threats over his efforts to check parts of the Trump agenda, ordered several participants in the group text about attacks on Yemen not to delete their texts. The move drew criticism from Republicans including Attorney General Pam Bondi, who suggested that the Justice Department wouldn't investigate the episode. Still, some Republican lawmakers have openly criticized Defense Secretary Pete Hegseth for disclosing operational details in a nonsecure channel. Trump warns carmakers not to raise prices in response to auto tariffs. The president's demand, delivered to C.E.O.s this month, leaves manufacturers in a bind, according to The Wall Street Journal: Absorb higher costs and accept leaner profits, or potentially face the wrath of the White House. It's a sign of the tough choices being imposed on carmakers, especially as fulfilling Trump's goal of increasing domestic auto manufacturing would take years. Inflation watch The American consumer is looking shakier by the day. The latest data point: Shares in Lululemon on Friday sank sharply in premarket trading after the apparel maker, whose sales zoomed during the coronavirus pandemic, reported a downbeat outlook for this year. It adds to a list of consumer brands and retailers who have warned that customers are spending less. Calvin McDonald, Lululemon's C.E.O., cited 'considerable uncertainty driven by macro and geopolitical circumstances.' That dismal take puts additional focus on the Personal Consumption Expenditures report, the Fed's favored inflation measure. It's set for release at 8:30 a.m. Eastern. What to know about the report: While the full effects of Trump's tariffs are expected to show up in the coming months, economists will be closely watching for signs of whether businesses are adjusting prices in anticipation. Two big questions are underlying the data. Could a hot reading on Friday have any implications on the Trump agenda, especially as economists warn that his immigration crackdown and the trade war could accelerate inflation? On the flip side, would a tame number persuade the Fed to resume cutting rates more quickly? Here's what to watch for on Friday: Consumer sentiment data will also be on the radar. The revised March reading from the University of Michigan is set for release on Friday, offering another gauge on households' mood. A similar survey by The Conference Board on Tuesday showed that consumer confidence had plunged to a 12-year low. Among Americans' chief concerns: inflation and tariffs. Downturn and trade war worries are weighing on markets. The S&P 500 is on track for its first losing quarter since 2023. One automaker that's not sweating a trade war President Trump's auto tariffs may not have come as a complete surprise, but they still sent much of the industry and international leaders reeling. Trump's vow to hit carmakers with levies on imported cars and auto parts prompted especially loud protests from leaders in France and Germany, who urged the European Union to respond. But one European manufacturer doesn't seem to be sweating the move: Ferrari. Ferrari announced on Thursday that it would raise prices by as much as 10 percent for most models, which would mean an additional 40 grand for a $400,000 Purosangue, Italian for 'thoroughbred.' It explicitly cited 'the introduction of import tariffs on E.U. cars into the U.S.A.' Shares in the Italian luxury carmaker were up nearly 3 percent on Friday — after two analyst upgrades. Why Trump's tariffs are unlikely to dent Ferrari: 'We are hard-pressed to think of any customer cohort in the U.S. that is better placed than Ferrari's to absorb higher prices,' Stephen Reitman, an auto analyst at Bernstein, wrote in a research note on Thursday. The waiting list for a new Ferrari is already long, as much as three years for some Purosangue models. Another data point: 'The majority of Ferraris sold in the U.S. go to owners who already own more than one Ferrari (the global average is 49 percent),' Reitman wrote. He added that 'any increase in new prices will be somewhat cushioned by the knowledge that the customer's other Ferraris in their garage have seen their values rise as well.' And there's a potential Trump tax break. 'If the president makes good on his promise of tax cuts for higher earners and allowing the deduction of car interest payments from income tax,' Reitman wrote, 'that certainly does not hurt Ferrari customers.' The rest of the industry, and its customers, may not fare so well. Arthur Laffer, the influential conservative economist whom Trump awarded the Presidential Medal of Freedom in 2019, wrote in a recent analysis that the tariff policy needed serious work to avoid battering the auto sector, according to The Associated Press. Especially important, according to Laffer, is keeping a temporary exemption for cars and parts from that fall under the current the United States-Mexico-Canada Agreement. 'Without this exemption, the proposed tariff risks causing irreparable damage to the industry, contradicting the administration's goals of strengthening U.S. manufacturing and economic stability,' he wrote. Deals Politics, policy and regulation Best of the rest
