Core Scientific Expected to Exceed $30 per Share in Acquisition Deal
Cantor Fitzgerald estimates that Core Scientific (CORZ) could exceed $30 per share in a potential acquisition by CoreWeave, citing long-term cash flows from AI contracts and data center replacement value. This represents nearly a 90% increase from its current price just above $16.
Key points include:
- The report follows The Wall Street Journal's news of advanced talks for acquisition after a failed $5.75 per share offer in 2024.
- CORZ shares rose 33% to over $16, but Cantor believes the company is still undervalued by at least 50%.
- A significant 12-year, $3.5 billion infrastructure lease with CoreWeave adds value, estimated at $24/share. Replacement value of power infrastructure contributes an additional $11.70/share.
The BTC - AI Pivot
Rittenhouse Research supports the shift from BTC mining to AI infrastructure, noting that successful crypto companies are transitioning towards AI due to stable cash flows compared to BTC's volatility. The argument highlights:
- The infrastructure used for BTC mining can be repurposed for AI processing.
- Future profitability in BTC mining relies on developing more efficient chips, which is becoming increasingly challenging.
Challenges in Pivoting Away from BTC
Not all shifts have been successful. Bit Digital's exit from BTC mining led to a 15% drop in stock value, while Canaan has ceased its AI chip business entirely, with stock down nearly 75%. In contrast, Core Scientific may leverage its existing infrastructure for the growing AI market.
If Cantor's projections hold, CoreWeave's upcoming bid for CORZ could significantly differ from last year's offer, potentially setting a precedent for the sector.