CoreWeave (CRWV) Stock Slump as Analysts Question Acquisition Impact

CoreWeave (CRWV) saw its stock price decline by 3.6% on Tuesday’s opening bell, trading as low as $153.97 amid questions from analysts about whether its recent acquisition of Core Scientific (CORZ) will significantly boost its bottom line.

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CoreWeave (CRWV) Stock Slump as Analysts Question Acquisition Impact CoreWeave Acquires Volatile Mining Business Related Links

Despite the morning weakness, the crypto-mining company, which has transformed into an AI infrastructure provider, maintained a substantial market capitalization of $75 billion. This valuation stands in stark contrast to the steep 288% increase in its share price since its March initial public offering (IPO).

CoreWeave shares decline on Tuesday. Source: Google Finance

Selling pressure intensified after D.A. Davidson analyst Gil Luria cast doubt on the $9 billion all-share deal announced Monday. Luria suggested the acquisition’s primary role might be operational—ensuring capacity isn’t lost to competitors—rather than a vehicle for significant profit growth.

Gil Luria appears on Squawk Box on Tuesday. Source: CNBC

Taking a similar stance, Mizuho Securities downgraded CoreWeave’s stock from “Outperform” to “Neutral.” While acknowledging potential long-term advantages from integrating Core Scientific’s resources, the bank characterized the company’s current risk-adjusted returns as “balanced,” suggesting the stock might consolidate after its dramatic run-up.

CoreWeave Acquires Volatile Mining Business

Shares of acquired entity Core Scientific are infamous for their volatility, driven by the inherent instability of the cryptocurrency market that forms the bedrock of its operations.

Moreover, Core Scientific’s financial performance is often punctuated by events like Bitcoin’s quadrennial halving. This was evident in its first-quarter earnings, where operational metrics suffered year-over-year declines in revenue and profitability.

Should CoreWeave retain the acquired business, it faces inheriting this volatility. The parent company acknowledged potential investments of Core Scientific’s assets into High-Performance Computing (HPC) for AI, or potential divestiture of the mining operations, noting its “potential to repurpose… toward HPC usage or divest crypto mining business over the medium-term horizon.”

For buyers, HPC, particularly applications supporting burgeoning AI workloads, was already a strategic focus for CoreWeave in-house. Moves toward non-mining HPC use align with strategies adopted by other industry players like Hive Digital, aimed at hedging against cyclical crypto revenue.