Core Scientific is navigating choppy waters as it grapples with a valuation mismatch following its recent quarterly earnings report. Despite surpassing expectations in adjusted EBITDA, the company’s revenue stumbled, leading to a sharp focus on its upcoming merger with AI cloud provider CoreWeave. The merger, already stirring investor sentiment, is pegged for a shareholder vote in the final quarter of 2025. Jefferies, a prominent investment bank, recently commented on these developments, highlighting a disconnect between Core Scientific’s current market valuation and its potential worth.
Valuation Tensions and Market Reactions
Jefferies’ report underscores a curious valuation gap: CoreWeave’s fluctuating stock price, which has danced between highs of $183 in June and a more recent dip below $100, directly influences Core Scientific’s perceived worth. At CoreWeave’s current trading price of $99.97, the all-stock merger deal values Core Scientific shares at approximately $12.35—well shy of Jefferies’ fair value estimate of $16 to $23. This discrepancy hints at underlying skepticism among investors regarding the merger’s prospects, with some seemingly betting against its successful completion.
Core Scientific ended its recent trading session at $14.13, reflecting market unease. The ebb and flow of CoreWeave’s stock are pivotal, as the agreed exchange ratio of 0.1235 means Core Scientific’s valuation is tethered to CoreWeave’s market performance. Jefferies suggests that a continued slump in CoreWeave’s stock could necessitate a renegotiation of the exchange ratio, potentially adjusting it to between 0.16 and 0.20 to realign Core Scientific’s valuation with the $16 to $23 range. This situation mirrors broader trends in the crypto market, as seen in Bitcoin Mining Profitability Rose 2% in July Amid BTC Price Rally, Jefferies Says.
Strategic Implications and Future Projections
The unfolding drama is more than just numbers on a page. It illustrates the broader volatility and strategic imperatives in the cryptocurrency and tech sectors. Jefferies maintains a bullish stance on Core Scientific, upgrading its price target from $16 to $22, buoyed by the potential synergies from the CoreWeave acquisition. Yet, this optimism is tempered by caution—the bank acknowledges the need for contingency measures, like a collar provision, to buffer against further price swings before the decisive shareholder vote.
Market observers are keenly watching how Core Scientific navigates these choppy seas. The company’s assets and cash flow potential, Jefferies argues, justify a higher valuation. This assertion rests on the assumption that the merger—or a renegotiated version thereof—will successfully close, unlocking new growth avenues for Core Scientific. However, the skepticism surrounding the current exchange terms suggests not everyone is convinced.
Historical Context and Broader Market Trends
To understand the current conundrum, it’s essential to look back at recent market dynamics. CoreWeave’s meteoric rise to $183 in June was emblematic of the volatility that characterizes tech and cryptocurrency stocks. Since then, various market forces—including macroeconomic factors and sector-specific developments—have exerted pressure, causing significant price movements. Against this backdrop, Core Scientific’s challenges are not unique; they reflect broader trends impacting companies seeking to leverage strategic mergers in a constantly shifting landscape. This is similar to the recent shifts in the bitcoin market, as detailed in Bitcoin Mining Profitability Rose 2% in July Amid BTC Price Rally, Jefferies Says.
The upcoming shareholder vote in the fourth quarter of 2025 looms large. It represents a critical juncture for Core Scientific and its investors, with significant implications for the company’s strategic direction and market positioning. The possibility of renegotiation or deal stabilization measures introduces an element of uncertainty, raising questions about how Core Scientific will adapt to these challenges and whether investor confidence can be bolstered in the lead-up to the vote.
Looking Ahead: Questions and Considerations
As the clock ticks towards the decisive vote, several questions remain unanswered. Will CoreWeave’s stock recover, or are further renegotiations inevitable to salvage the deal? Can Core Scientific reassure skeptical investors of its growth potential amidst current market volatility? The answers to these questions will shape the company’s trajectory and influence market sentiment in the coming months.
For now, Core Scientific and its stakeholders must navigate a landscape marked by uncertainty and opportunity. The outcome of the CoreWeave merger—and its impact on Core Scientific’s valuation—will be a key storyline in the latter half of 2025. As always, the only certainty in the cryptocurrency and tech sectors is change itself.
Source
This article is based on: Core Scientific Faces Valuation Disconnect; PT Hiked to $22: Jefferies
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
