A $5 billion deal key to CoreWeave's AI empire just lost another investor's support

Core Scientific and CoreWeave Acquisition Overview - A significant shareholder in Core Scientific, Trip Miller of Gullane Capital, opposes the proposed acquisition by CoreWeave, indicating he would vote against it in the upcoming shareholder meeting [1][2] - The acquisition, valued at approximately $5 billion, is critical for CoreWeave to sustain its rapid growth and manage rising costs [2][3] - Concerns have arisen regarding the undervaluation of Core Scientific due to fluctuations in stock prices, with the current offer reflecting a value below its market price [3][12] Shareholder Opposition - Two Seas Capital, holding about 6.3% of Core Scientific's stock, has publicly criticized the acquisition, stating it is not profitable enough for shareholders and urging a rejection in the upcoming vote [4][24] - Miller describes the deal structure as flawed, suggesting it undervalues Core Scientific shares compared to current trading prices [14][15] CoreWeave's Position - CoreWeave's CEO, Michael Intrator, defends the acquisition as the best option for Core Scientific shareholders, claiming it offers significant long-term value creation [5][6] - The acquisition is positioned as a strategic move to streamline operations and reduce costs, particularly in leasing data center space [21][22] Market Context and Financial Performance - CoreWeave has experienced rapid growth, achieving a market capitalization of $70 billion and significant revenue increases, but faces challenges with rising costs and declining operating margins [15][19] - The company reported a revenue of $1.2 billion in Q2, doubling year-over-year, but its operating margins fell from 20% to 2%, indicating profitability issues [19] - CoreWeave's debt has increased to $11.2 billion, raising concerns about high borrowing costs relative to its profit margins [20] Strategic Implications - The acquisition would allow CoreWeave to save approximately $10 billion in lease payments over 12 years by owning Core Scientific, which is crucial for its long-term business model [21][22] - Two Seas Capital argues that the initial offer undervalues Core Scientific's intrinsic and strategic value, suggesting that the company could be worth significantly more if left independent [24][25]