TLDR
- CoreWeave stock has dropped over 40% since July, reducing the value of its $9 billion Core Scientific acquisition deal
- Core Scientific shareholders are demanding better terms due to the declining deal value from CoreWeave’s stock performance
- The all-stock transaction was set at 0.1235 CoreWeave shares for each Core Scientific share when stock prices were higher
- Core Scientific stock trades above the current implied takeout price, suggesting investors expect improved terms
- Both companies may need each other too much to walk away, with power capacity being critical for AI infrastructure
CoreWeave stock has tumbled more than 40% from its July peak. This sharp decline is creating problems for the company’s planned acquisition of Core Scientific.
The AI cloud computing provider agreed to buy the Bitcoin mining and data center operator in an all-stock deal. The original transaction valued Core Scientific at around $9 billion.
The exchange ratio was fixed at 0.1235 CoreWeave shares for each Core Scientific share. This seemed like a good deal when CoreWeave’s stock was flying high.
But as CoreWeave’s stock price collapsed, the headline value of the deal shrank. What started as a $9 billion tie-up now implies far less value for Core Scientific shareholders.
This drop has pushed Core Scientific holders to demand better terms. They don’t want to sell at a discount created by someone else’s falling stock price.
CoreWeave’s current market cap sits at $50.34 billion. The stock carries a technical sentiment signal of “Strong Sell” despite being up 157.60% year-to-date.
What Each Company Wants
CoreWeave wants scale in power and server racks without taking on more debt. Buying Core Scientific would deliver about 1.3 gigawatts of gross power capacity.
The deal also provides a clear path to expand operations. CoreWeave expects big cost savings from collapsing leases into owned infrastructure.
Core Scientific wants a fair price for its shift from bitcoin mining to AI computing. Shareholders see other companies getting higher valuations as they add high-performance computing capacity.
They have long-term customers lined up. Core Scientific shareholders don’t want to accept a discount just because CoreWeave’s stock fell.
Market Signals Point to Deal Changes
Core Scientific’s stock trades above the current implied takeout price. This tells investors they expect CoreWeave to sweeten the exchange ratio.
It also shows they see standalone value in converting more mining power to AI computing. This could happen if talks drag on without resolution.
CoreWeave’s stock became the key factor once the deal was announced. If it stabilizes or bounces back, the original terms look less painful.
If the stock slips again, pressure grows to raise the ratio. Another option is adding a collar to protect Core Scientific’s value.
A higher exchange ratio is the cleanest fix. It restores headline value without requiring new cash from CoreWeave.
A collar can cap the downside if CoreWeave’s stock wobbles again. Either change would calm both sets of shareholders.
There’s also the option of adding a partial cash component. This would remove some market risk for Core Scientific holders.
It would also force CoreWeave to weigh cash burn against the urgency to secure power capacity right now. Power is becoming the new bottleneck in AI infrastructure.
CoreWeave rents out computing capacity powered by Nvidia chips. Owning Core Scientific’s sites would shorten delivery timelines and reduce lease costs.
Management has talked up hundreds of millions in annual savings from the deal. Those savings would improve margins and make each new server rack more profitable.
Core Scientific gains a deep-pocketed anchor customer and faster conversion from mining to AI hosting. This shift has been rewarded across the sector.
The company’s Q2 results disappointed investors, adding to concerns about CoreWeave’s future performance. Insider sales have also worried some shareholders.
CoreWeave’s average trading volume is 21.45 million shares. The stock currently shows technical weakness with selling pressure continuing.
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