Cerebras success could lead to IPO wave
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Illustration: Brendan Lynch/Axios
We knew the Cerebras IPO would whet public market appetite for new AI stocks, ahead of SpaceX next month, but not that it would look more like a nachos platter than an amuse bouche.
- Shares opened at $350 — a whopping 89% above its IPO price — and climbed as high as $385 before settling at $311.
- For context, it originally filed to price at between $115-$125, and just four months ago sold shares in a Series H round at $89.
It's massive validation for early-stage investors like Benchmark, Foundation Capital and Eclipse Ventures, which backed Cerebras at a time when chips were out of VC fashion. Let alone a chipmaker whose thesis was heavy in memory.
- Benchmark's total investment of $268 million, a lot of which came from its general partners via an SPV, was valued at $5.5 billion as of yesterday's close.
Zoom in: There is some hair on this deal, such as its customer concentration and growing U.S. voter interest in data center moratoriums. Plus power concerns given how Cerebras plans to scale up from megawatts to gigawatts.
- But none of that really mattered in the context of the AI hockey stick.
What to watch now is what happens when insiders begin to sell. And we won't need to wait six months.
- Cerebras has structured its lockups more like a dribble than a dump.
- For example, around 30 million more shares get unlocked today. Some from employees, some from directors and officers. Additional lock-up expirations come after Cerebras reports Q2 earnings and then six more times through the end of October.
- What a big pop giveth, it can taketh away. Just ask Figma. If shares trade down significantly, it could make retail investors hesitant to buy into the next big AI IPO.
The bottom line: Cerebras' success, plus Fervo Energy and BX Digital Infrastructure, may help spark the IPO wave that we've been waiting on for years.
- Not just outsized frontier lab offerings, but a wider swath of AI-adjacent unicorns that have been content to keep raising private rounds.
