The shares of AI infrastructure firm CoreWeave (CRWV) plunged into the red zone on Thursday after the company’s effort to merge with Core Scientific (CORZ), a Bitcoin miner and data center operator, fell through.
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On Thursday, shareholders of Core Scientific rejected CoreWeave’s $9 billion all-stock acquisition offer after the proposal failed to secure enough votes to pass.
CoreWeave’s shares tumbled more than 5%, hitting $132.90 as of 11:21 a.m. EDT. On the other hand, Core Scientific’s shares are rising by about the same measure.
The rejection comes as CoreWeave’s offer, put forward in July, faced staunch criticism from Core Scientific’s shareholders, who believe the deal undervalues the company. However, the company, which is backed by Nvidia (NVDA), refused to raise its bid, emphasizing that the proposal is fair and reflects the Bitcoin miner’s market value.
Does CoreWeave Need Core Scientific?
In fact, Michael Intrator, CoreWeave’s chief executive, recently pointed out that while Core Scientific would make a great addition to the company, the business is not critical to the company’s plan. Reacting to the rejection, Intrator noted that his company “respects the views” of Core Scientific’s shareholders and will continue collaborating with Core Scientific on “shared opportunities” by leveraging each company’s strengths.
According to Evercore ISI analyst Amit Daryanani, while merging with Core Scientific will help CoreWeave improve operational efficiency and expand power capacity, the New Jersey-based AI cloud computing company will flourish without it. Daryanani added that CoreWeave already has substantial resources to support significant growth on its own.
Is CRWV Stock a Good Buy?
Meanwhile, sentiment toward CoreWeave on Wall Street remains cautious, with its shares currently carrying a Moderate Buy consensus rating from analysts. This is based on 14 Buys, 10 Holds, and one Sell issued by 25 analysts over the past three months.
However, at $158.17, the average CRWV price target points to more than 19% upside from the current level.
