CoreWeave Acquires Core Scientific in $9 Billion Deal Stock Drops 3.6%

CoreWeave has recently announced its decision to acquire Core Scientific in a substantial all-stock transaction valued at $9 billion. This move has sparked significant scrutiny from financial analysts, who are questioning the economic benefits and strategic rationale behind the acquisition.

CoreWeave's stock, trading under the ticker CRWV, opened significantly lower on Tuesday, reflecting growing skepticism among analysts. The stock noted a 3.6% devaluation, reaching a low of $153.97 per share. Despite this drop, CoreWeave retains an impressive market capitalization of $75 billion, bolstered by a substantial 288% growth since it went public in March.

Analysts, including D.A. Davidson’s Gil Luria, have expressed concerns that the $9 billion share exchange agreement lacks the potential to deliver any tangible profit gains for CoreWeave. Luria highlighted that the only advantage for CoreWeave seems to be preventing Core Scientific’s resources from falling into the hands of other competitors, underscoring the strategic rationale behind the acquisition.

Mizuho analysts furthered this outlook by lowering CoreWeave’s stock rating to ‘Neutral’ from ‘Outperform.’ This sentiment reflects potential advantages coming from the merger but also considers the fact that CoreWeave’s stock has experienced a near 300% run-up, suggesting a more balanced risk/reward scenario for investors in the current market climate.

Core Scientific, a digital currency mining enterprise, frequently displays significant volatility in share prices due to its reliance on the often unpredictable cryptocurrency industry. Core Scientific’s financial operations are closely connected with the cyclic Bitcoin halving events. In a recent financial statement, Core Scientific reported a considerable profit of $580 million in the first quarter, though it accompanied a slump in their core revenue numbers.

Given the volatile nature linked to crypto mining, it remains uncertain if CoreWeave will maintain Core Scientific’s Bitcoin mining venture post-acquisition. CoreWeave has communicated plans for potentially utilizing Core Scientific’s existing infrastructure for high-performance computing (HPC) applications or considering divesting from crypto mining. Recent industry trends observe other miners like Hive Digital pivoting their business models toward AI and HPC to stabilize earnings amidst fluctuating crypto markets.

CoreWeave Inc. has announced a significant acquisition of Core Scientific Inc. in an all-stock deal valued at approximately $9 billion. The acquisition, which aims to integrate Core Scientific's data center infrastructure into CoreWeave, is expected to enhance CoreWeave's AI and high-performance computing (HPC) capabilities. The deal is set to close by the fourth quarter of 2025, pending regulatory approvals and shareholder votes.

The announcement has had a notable impact on the stock prices of both companies. CoreWeave shares initially dipped by nearly 4% after the news, while Core Scientific's stock plummeted by nearly 20%. Despite this initial drop, Core Scientific's stock has since recovered, with a 25% increase since the deal was first reported. The acquisition has raised concerns among analysts, who view the move as opportunistic and potentially risky given the high debt levels of both companies.

Core Scientific, which emerged from Chapter 11 bankruptcy in early 2024, has pivoted from Bitcoin mining to HPC and AI hosting. However, the company's debt levels remain high, with a total of $1.119 billion as of Q1 2025. The acquisition by CoreWeave is expected to provide significant benefits, including the elimination of over $10 billion in future lease overheads and the consolidation of real estate tied to data centers. This could potentially de-risk CoreWeave's future expansion and enhance its operating efficiency.

However, the deal also comes with risks. CoreWeave is already highly leveraged, with a total debt of $17.2 billion as of Q1 2025. The company has been accumulating net losses, typically around $300 million, to rapidly expand its AI data center operations. CoreWeave's CEO, Michael Intrator, has expressed confidence in the company's bullish AI strategy. The company generated $981.6 million in revenue in Q1 2025, an uptick of 420% year-over-year, and has access to Nvidia's cutting-edge technology. Intrator believes that AI demand is still underestimated by investors.

Despite the risks, the acquisition reflects the potential value creation from the merger. Major brokerages have downgraded CoreWeave's rating but increased their price targets, reflecting concerns about the company's financial health and the potential impact of the acquisition on its already high debt levels. The significant price target increase from $75.00 to $115.00 reflects the potential value creation from the merger, even as analysts expressed concerns about the company's financial health and the potential impact of the acquisition on its already high debt levels.