Core Scientific (CORZ) Shares Drop 0.78% Amid Legal Scrutiny Over $9B All-Stock Merger with CoreWeave

Core Scientific (CORZ) shares fell 0.78% on Thursday, marking their lowest level since September 2025, with an intraday decline of 1.25%. The stock has been pressured by ongoing legal and strategic uncertainties surrounding its proposed all-stock merger with CoreWeave (CRWV), which has sparked investor caution and institutional repositioning.

The merger, valued at $9 billion based on a fixed exchange ratio of 0.1235 CoreWeave shares for each Core Scientific share, faces scrutiny from Kahn Swick & Foti, LLC. The law firm is investigating whether the deal adequately values Core Scientific’s high-performance computing (HPC) and AI infrastructure assets. This legal challenge has fueled concerns about potential undervaluation, particularly as CoreWeave’s stock has also declined, reflecting broader skepticism about the transaction’s terms.

Analyst sentiment has further weighed on the stock. Needham analyst John Todaro downgraded Core Scientific from "Buy" to "Hold," citing risks tied to the merger’s structure. He highlighted that the all-stock deal limits arbitrage opportunities and exposes Core Scientific shareholders to CoreWeave’s performance. Despite the company’s strategic advantages—such as its proximity to urban fiber networks and its early-mover position in HPC—Todaro noted that the merger’s lack of cash consideration could dilute shareholder value.

Institutional investors have shown a mixed response to the merger. Firms like Ardsley Advisory Partners and Alight Capital added to their holdings, while others, including Two Seas Capital, publicly opposed the deal. This divergence underscores uncertainty about the merger’s approval prospects, with shareholder opposition and insider support creating a fragmented landscape. The conflicting signals have amplified volatility as traders assess the likelihood of the deal’s completion and its valuation implications.

Strategically, the merger aims to combine CoreWeave’s AI infrastructure with Core Scientific’s HPC capacity, but the all-stock structure has raised questions about fair compensation for Core Scientific’s assets. Analysts at Macquarie and Roth Capital have acknowledged potential synergies but downgraded their ratings for CORZ, citing the absence of a cash component and regulatory risks. The lack of competing bids from major hyperscalers further complicates the deal’s value proposition, as CoreWeave’s existing tenant agreements reduce the likelihood of a higher offer.

While Core Scientific’s long-term growth in the HPC and AI markets remains a key positive, the merger’s structure may hinder its ability to fully capitalize on its cost advantages. Todaro projected 383 megawatts of HPC capacity by 2026, but the stock’s future is now closely tied to CoreWeave’s performance. As legal and institutional dynamics evolve, investors remain divided, with options activity reflecting heightened uncertainty. The outcome of the merger and regulatory scrutiny will likely determine the trajectory of CORZ’s stock in the near term.