Core Scientific (CORZ) has revealed its second-quarter 2025 results, showcasing a mixed performance as revenue fell short of expectations while adjusted EBITDA results surpassed forecasts. However, the spotlight remains firmly on its much-anticipated merger with AI cloud provider CoreWeave (CRWV), which is scheduled for a shareholder vote in the upcoming fourth quarter. Investment bank Jefferies highlighted in a recent report that the effectiveness of this merger hinges significantly on the performance of CoreWeave’s stock, currently priced at $99.97.
The all-stock merger deal values Core Scientific shares at approximately $12.35, notably lower than Jefferies’ estimated fair value range of $16 to $23 per share. This situation draws attention to the agreed exchange ratio of 0.1235, indicating that Core Scientific’s valuation is closely tied to fluctuations in CoreWeave’s share price. In June, CoreWeave was trading as high as $183, but it has since closed below the $100 mark, leading to an implied valuation for Core Scientific that underperforms market expectations. At market close, CORZ traded at $14.13, suggesting a disconnect that raises concerns about investor confidence in the merger’s success.
Investors appear wary, a sentiment echoed by Jefferies, which argues that Core Scientific’s underlying assets and cash flow potential warrant a higher market valuation. Should CoreWeave’s stock not rebound prior to the shareholder vote, Jefferies suggests possibilities for renegotiation of the merger terms, particularly around the exchange ratio, which could be adjusted to a range of 0.16 to 0.20. This change might help align the implied valuation of CORZ shares more closely with the anticipated fair value. Additionally, a collar provision could help stabilize the deal amid stock volatility.
Jefferies maintains a buy rating on Core Scientific shares, increasing its price target to $22 from $16 in light of the CoreWeave acquisition.
At the time of publication, Core Scientific shares were noted to have risen by 1.8%, hovering around $14.40, which reflects ongoing fluctuations in the market as this merger unfolds.
Core Scientific (CORZ) Q2 2025 Results and Merger with CoreWeave (CRWV)
Key points regarding Core Scientific’s recent performance and merger proposal:
- Weaker Revenue: Core Scientific reported weaker-than-expected revenue in its Q2 2025 results.
- Topping Adjusted EBITDA: The company exceeded adjusted EBITDA estimates, indicating operational strength despite revenue shortfalls.
- Proposed Merger: Focus is on the planned merger with CoreWeave, an AI cloud provider, pending a shareholder vote in Q4.
- Valuation Concerns: Current all-stock deal values Core Scientific shares at approximately $12.35, below the estimated fair value of $16 to $23.
- Stock Price Sensitivity: Investor sentiment towards the merger is heavily influenced by CoreWeave’s stock price, which closed below $100.
- Fluctuating Value: The agreed exchange ratio of 0.1235 results in Core Scientific’s value fluctuating with CoreWeave’s share price.
- Potential Deal Failure: Discrepancies in stock valuations have led some investors to anticipate the possible failure of the merger.
- Renegotiation Possibility: Should CoreWeave’s stock fail to recover, there is potential for renegotiating the exchange ratio to stabilize the valuation.
- Collar Provision: A collar provision might be considered to mitigate future stock volatility impacting the deal.
- Analyst Rating: Jefferies maintains a buy rating on Core Scientific and raised the price target to $22, reflecting the anticipated benefits of the acquisition.
Investors should closely monitor the progress of the merger and stock price movements, as these directly impact Core Scientific’s valuation and future growth prospects.
Core Scientific’s Strategic Moves Amidst Market Volatility
Core Scientific (CORZ) has recently navigated a challenging landscape with its second-quarter 2025 earnings report revealing a revenue miss, yet a positive surprise on adjusted EBITDA. The spotlight, however, remains on its contentious merger proposal with AI cloud provider CoreWeave (CRWV), which is anticipated to gain traction with a shareholder vote slated for the fourth quarter. In contrast to this promising merger strategy, recent analyses from investment bank Jefferies highlight significant competitive dynamics that could influence investor sentiment and market positioning.
CoreWeave’s current trading price reflects a stark deviation from the implied valuation of Core Scientific shares established through their proposed all-stock deal, suggesting a disconnect that could deter investor confidence. With the transaction pegged at an exchange ratio of 0.1235 and CoreWeave’s fluctuating stock performing below the expected threshold, the potential undervaluation of Core Scientific assets has raised eyebrows among analysts and market participants alike. The overarching concern revolves around whether CoreWeave can regain its momentum, with Jefferies stressing that a dip below the $100 mark could jeopardize the merger’s viability, prompting a possible renegotiation of terms.
This merger landscape paints a mixed picture: while the agreement may position Core Scientific for growth, reliance on CoreWeave’s stock performance could entail risks. Potential investors could see the undervaluation of CORZ as an attractive entry point, especially with Jefferies upgrading its price target to $22. Conversely, existing shareholders might find themselves unsettled by the speculative nature of the deal, particularly if market volatility persists or if sentiment toward CoreWeave deteriorates further. Investors advocating for a stronger price threshold in the exchange ratio may also begin to voice concerns about the strategic alignment and mutual benefit of this proposed merger.
In essence, while the strategic alliance with CoreWeave appears promising on the surface, its success is tethered to market fluctuations and investor confidence. This scenario could benefit risk-tolerant investors seeking opportunities in emerging sectors such as AI, while it poses potential pitfalls for more conservative stakeholders who prefer stability over speculative ventures. The upcoming vote will undoubtedly serve as a pivotal moment, not just for Core Scientific but for the broader market landscape in AI cloud integration.
