According to Cointelegraph, CoreWeave's shares experienced a downturn on Tuesday as analysts expressed skepticism about the company's recent acquisition of Core Scientific. The stock fell by 3.6% after the market opened, reaching a low of $153.97. Despite this decline, CoreWeave, which has transitioned from a crypto miner to an AI infrastructure company, maintains a market capitalization of $75 billion, having achieved a 288% increase since its initial public offering in March.
The selling pressure intensified following comments from D.A. Davidson's Gil Luria, who questioned the $9 billion all-share acquisition deal announced on Monday. The agreement offers Core Scientific shareholders 0.1235 shares of newly issued CoreWeave Class A common stock for each share of CORZ they own. Luria expressed doubts about the acquisition's profitability for CoreWeave, suggesting that the move primarily prevents Core Scientific from allocating its capacity elsewhere.
Further complicating the situation, analysts at Mizuho downgraded CoreWeave's stock from "Outperform" to "Neutral." While they acknowledged potential advantages from acquiring Core Scientific, they noted that CoreWeave's risk-reward profile now appears "balanced," indicating that the stock might pause after its significant rally.
The acquisition of Core Scientific, a company known for its volatile crypto mining operations, adds another layer of complexity. The business is heavily influenced by the cryptocurrency market and Bitcoin's quadrennial halving cycle, which has impacted its revenue and profitability. It remains uncertain whether CoreWeave will continue Core Scientific's Bitcoin mining activities. CoreWeave has indicated plans to potentially repurpose Core Scientific's assets for high-performance computing (HPC) or divest its crypto mining operations in the medium term.
This strategic shift towards HPC and AI workloads aligns with trends seen in other mining companies, such as Hive Digital, which have pivoted to stabilize revenue and earnings amid fluctuating cryptocurrency prices. The acquisition reflects CoreWeave's broader strategy to adapt to the evolving market landscape, though its success in integrating Core Scientific's operations remains to be seen.
