After a turbulent period involving delisting, bankruptcy, and relisting, Core Scientific (NASDAQ:CORZ) shareholders are now enjoying a significant surge in the share price. The Bitcoin (BTC-USD) mining company has seen its stock soar by over 140% in the past months following an all-cash offer from CoreWeave that values the company at $1 billion. Core Scientific is recognized as one of the leading Bitcoin miners in North America. Thus, its fortunes are closely tied to the performance of the cryptocurrency. Investors might find this a compelling way to gain exposure to the space.
Interestingly, the proposed acquisition by CoreWeave comes on the heels of new, long-term contracts between the two companies. Core Scientific recently inked multiple 12-year contracts with CoreWeave, expected to generate more than $3.5 billion in revenue.
Core Scientific is an Attractive Acquisition Target
Core Scientific is a major digital asset mining industry player specializing in two primary segments: Mining and Hosting. The company not only operates large-scale data mining centers but also provides infrastructure, software solutions, and additional services related to blockchain technology.
Its offerings include hosting services for other substantial Bitcoin miners, comprehensive care for customers’ digital asset mining equipment, and the sale of mining equipment. Core Scientific operates eight data centers across Georgia, Kentucky, North Carolina, North Dakota, and Texas, with most of its revenue originating from self-mining.
Recently, the company announced a 12-year contract agreement with CoreWeave, wherein Core Scientific will provide about 200 MW of infrastructure hosting for CoreWeave’s high-performance computing services. This was swiftly followed by Core Scientific receiving a non-binding, unsolicited acquisition proposal from CoreWeave for the purchase of all outstanding shares of the company at $5.75 per share in cash.
However, after careful consideration and consultation with independent financial and legal advisors, the company’s Board of Directors rejected the proposal. The Board concluded that CoreWeave’s proposal significantly undervalued the company and was not in the best interests of Core Scientific and its shareholders.
Analysis of Core Scientific’s Recent Results
Core Scientific reported a successful Q1 with notable financial and operational improvements. The total revenue went up to $179.3 million from $120.7 million in Q1 2023, a 48.6% year-over-year increase and exceeding expectations by $30.78 million. Net income shifted from a loss of $0.4 million to an income of $210.7 million. Operating income increased to $55.2 million from $7.6 million, and adjusted EBITDA was $88.0 million compared to $40.3 million for the same period in the prior year. GAAP EPS of $0.78 significantly beat consensus expectations of $0.11.
The company also expanded its hosting offering by delivering 16 MW of infrastructure to high-performance compute customers ahead of schedule and completed the deployment of numerous new miners.
Core Scientific continued to dominate in Bitcoin mining, producing 2,825 self-mined Bitcoin, the highest amongst publicly listed miners in North America. The firm’s overall hash rate stood at 25.5 EH/s, with self-mining contributing 19.3 EH/s and hosting services generating 6.2 EH/s. With approximately 745 megawatts of managed infrastructure, the company claims to have the largest owned infrastructure footprint among publicly listed miners in North America
What is the Price Target for CORZ Stock?
Analysts following Core Scientific have been constructive on the stock. Most recently, BTIG analyst Gregory Lewis raised the price target on the shares from $8 to $10 while maintaining a Buy rating. He noted the “data center gold rush,” highlighting the growing need for data centers and Core Scientific’s agreement to supply 200MW of power to CoreWeave.
Core Scientific is rated a Moderate Buy, with the price target for CORZ stock of $10 representing a potential upside of 10% from current levels.
The stock has been highly volatile, resulting in a monster beta of 3.48. It currently trades at the high end of its 52-week price range of $2.61 to $10.70 and demonstrates ongoing positive price momentum, trading above its 20-day (7.36) and 50-day (5.56) moving averages.
Concluding Thoughts on CORZ
Core Scientific is well-positioned to continue leading the digital asset mining sector. The long-term contract agreements with CoreWeave, a 48.6% year-over-year revenue increase in Q1, and the resulting surge in stock price reflect the appealing investment opportunity that CORZ stock presents for those seeking exposure to the Bitcoin mining sector.
