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Investing.com -- CoreWeave shares fell 7.7% as the company, which recently scaled down its initial public offering, is reportedly in talks to raise approximately $1.5 billion in debt. The potential debt offering is expected to be in the form of high-yield bonds and may be led by JPMorgan Chase & Co. (NYSE:JPM), sources familiar with the matter disclosed to Bloomberg.
The cloud-computing provider, backed by Nvidia Corp . (NASDAQ:NVDA), had initially set its sights on a $4 billion IPO. However, market volatility ahead of President Donald Trump’s tariff announcements on April 2 led to a more conservative $1.5 billion raised in late March. The uncertainty surrounding the stock market and investors’ wariness of riskier assets contributed to the reduced IPO size.
CoreWeave’s decision to pursue significant debt financing so soon after its IPO has raised concerns among investors, prompting the drop in stock price. The move to raise debt could be interpreted as a need for additional capital, which might not have been fully met by the IPO proceeds.
The Livingston, New Jersey-based company’s pivot to debt financing also comes at a time when the market is experiencing heightened sensitivity to economic and political news. The timing of these discussions, in the wake of a scaled-down IPO and amidst market instability, appears to have affected investor confidence, resulting in the downward movement of CoreWeave’s stock.
As the company navigates its post-IPO phase, the market will closely watch how CoreWeave manages its capital raising strategies and how it might impact its financial stability and growth prospects in the competitive cloud-computing sector.
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