Core Scientific Surges 9%—Is the Merger Play Overriding Downgrades?

• CORZ climbs 8.99% to $13.64, hitting a near-term high of $13.65
• JMP Securities downgrades to 'Market Perform' but reaffirms $15 price target
• Rumors of a $9B merger with CoreWeave spark speculation despite analyst caution
• 52-week range remains wide ($6.20–$18.63), with current price 56% above 200-day average

Today’s sharp rally defies recent downgrades, signaling investor focus on strategic moves rather than near-term earnings. The stock’s volatility—amplified by a beta of 6.71—keeps traders on edge as merger rumors and technical signals collide.

Merger Speculation Outshines Downgrades
Core Scientific’s 9% surge stems from market optimism around its rumored $9 billion merger with CoreWeave, despite JMP Securities downgrading its rating. Analysts noted the merger’s potential to unlock synergies in AI infrastructure, outweighing concerns over Q1 revenue declines and mining headwinds. Technicals also play a role: the stock pierced resistance at its 50-day moving average ($12.22), triggering algorithmic buying as volume spiked to 16.4 million shares—118% above daily averages. Institutional buying and insider activity (e.g., Yadin Rozov’s 30% stake increase) further fueled momentum.

Bullish Options Capture Merger Momentum—Watch $14 Resistance
Technical Indicators:
• RSI: 52.57 (Neutral)
• Bollinger Bands: Current price at Middle Band ($13.92), with Upper at $18.59 (52W high proximity)
• MACD: Histogram negative (-0.41) but narrowing—suggests bullish divergence potential

Trading Setup: Aggressive bulls should target the $13.5–$14 zone, where 200-day support ($12.22) and merger optimism intersect. A close above $14.30 (July 18 call strike) could trigger a sprint toward $18.59 resistance. Avoid chasing rallies beyond $14.50 without volume confirmation.

Top Option Picks:
1. CORZ20250718C13 (Call): Strike $13, Exp 7/18. Delta 0.70, IV 79.1%, Leverage 15.99%.
- Why: High delta aligns with bullish momentum; theta (-0.12) penalizes slow moves, but gamma (0.27) amplifies gains on $14+ breaks.
- Payoff: At $14.30 (5% gain), payoff is $1.30 vs. current $0.89 bid—48% upside.

2. CORZ20250718C13.5 (Call): Strike $13.5, Exp 7/18. Delta 0.55, IV 78.6%, Leverage 24.72%.
- Why: Balanced risk/reward; theta (-0.11) and gamma (0.32) offer sensitivity to mid-range moves.
- Payoff: At $14.30, payoff is $0.80 vs. current $0.58 bid—38% gain.

Action Hook: Bulls should layer into these calls if $14 holds—avoid chasing above $14.50 without merger clarity.

Backtest Core Scientific Stock Performance
Core Scientific (CORZ) experienced a significant surge of 30% intraday following reports of its acquisition by CoreWeave. However, this positive momentum was short-lived as the stock subsequently faced a 30.5% nosedive after the merger announcement. The surge in CORZ's stock price, triggered by the acquisition news, was likely driven by market optimism regarding the deal's potential to enhance shareholder value. The 30% intraday increase on June 26, 2025, carried the stock to its highest levels since January 2025, indicating a strong initial reaction to the positive news. Unfortunately, investor sentiment took a sharp downturn following the announcement of the merger on July 13, 2025, leading to a substantial drop in the stock price. This decline was influenced by several factors, including concerns over the merger's adequacy and the process surrounding it. In conclusion, while the initial reaction to the acquisition news was highly positive, leading to a significant intraday surge, the subsequent merger announcement and related uncertainties resulted in a substantial drop in CORZ's stock price. This experience highlights the importance of careful due diligence and transparent communication in merger processes to sustain investor confidence and avoid adverse stock price reactions.

Hold the Play—But Respect the $14 Ceiling
Core Scientific’s surge hinges on merger execution and technical resilience above $14. While the sector leader Equinix (EQIX) ekes out 0.27% gains, CORZ’s 6.71 beta amplifies its volatility. Investors must watch for a breakdown below $12.69 (intraday low) or a close above $14.30—the latter would validate bullish momentum. Final Alert: Merge rumors + $14 resistance define this play—exit if $12.60 fails or $14.50 is rejected.