Markets
markets
Luke Kawa

Top Core Scientific shareholders mulling “revolt” against CoreWeave deal: Report

The Financial Times is reporting that some of the “top shareholders” of Core Scientific are crying foul over the terms of its all-stock takeover by CoreWeave and are planning on voting against the deal.

“Multiple funds” told the FT they’d be more comfortable with the deal if there were a separate measure in the arrangement that put a floor under the ultimate value Core Scientific would receive in the event that CoreWeave’s shares fell a lot from here (that is, a collar agreement).

Under the terms of the agreement, Core Scientific shareholders will receive 0.1235 shares of CoreWeave upon the closing of the deal.

At the time the news broke, that put the acquisition price at about $9 billion. But shares of CoreWeave are down nearly 34% since that time, while the S&P 500 is slightly higher over this period.

The post-IPO lockup period for the lion’s share of CoreWeave holders expires in mid-August, shortly after the company reports its second-quarter results.

We detailed the tricky situation Core Scientific’s brass put their shareholders in a month ago...

In sum, Core Scientific’s management:

  1. Hitched their wagon to CoreWeave to trade at a premium to what it otherwise would;

  2. Created a situation where CoreWeave’s issuance of shares for this deal, all else equal, would be expected to put some downward pressure on that company’s stock and be priced in ahead of the event (and perhaps already fully has been), lowering the ultimate value they’ll be getting for selling the company;

  3. Knows that this transaction will take place after a potentially negative catalyst for the acquiring company (the end of the IPO lockup), which may put some additional downward pressure on the shares;

  4. And by all appearances left no practical way for shareholders or potential shareholders to arb this away for a while, when 2) and 3) may have already rendered the point somewhat moot.

...and it looks like the hedge funds along for the ride are none too pleased about how this has all played out.

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Retail traders are “skipping the dip” this time

Here’s one noteworthy feature of the recent market downturn that has the S&P 500 poised for its worst week since reciprocal tariffs were announced in early April: retail traders seemingly aren’t eager to buy the weakness in single stocks the way they used to be.

JPMorgan strategist Arun Jain has flagged that retail traders instead appear to be “skipping the dip.”

“In contrast to the behavior observed during the post-Liberation Day selloff, retail investors did not seize the opportunity to buy-the-dip on Tuesday, with a few exceptions such as META,” he wrote of the day where the benchmark US stock index fell 1.2%. “In fact, they scaled back their ETF purchases and turned net sellers in single stocks.”

Then on Thursday, when the S&P 500 fell 1.1%, Jain projected that retail traders sold $261 million in single stocks. Through noon ET on Friday, his daily outflow estimate stands at $851 million.

With that intel, it’s little wonder why the carnage this week has been particularly intense in more speculative single stocks that had been favored by the retail community, including IREN, IonQ, Rigetti, Cipher Mining, Bloom Energy, and Oklo.

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Archer Aviation plunges on $650 million share sale following its third-quarter results

Air taxi maker Archer Aviation is deep in the red on Friday morning after reporting its third-quarter results after the bell Thursday. The stock is down more than 12%.

Investors don’t appear to be thrilled about the company’s $650 million direct stock offering, announced alongside its results.

The move marks at least the third major equity raise, and dilution, for Archer this year. The company raised $300 million from a new stock sale in February, and sold $850 million worth of shares in June.

On Archer’s earnings call Thursday, interim CFO Priya Gupta said the company came to the decision after “substantial inbound interest.” According to Gupta, the company has heard from government and commercial partners that liquidity is a “key driver to their decisions of who to partner with.” With its latest share sale, Archer said its total liquidity is more than $2 billion.

Archer Aviation sinks after reporting better-than-expected Q3 loss, announces it will acquire LA’s Hawthorne Airport

Archer Aviation sinks after reporting better-than-expected Q3 loss, announces it will acquire LA’s Hawthorne Airport

The move marks at least the third major equity raise, and dilution, for Archer this year. The company raised $300 million from a new stock sale in February, and sold $850 million worth of shares in June.

On Archer’s earnings call Thursday, interim CFO Priya Gupta said the company came to the decision after “substantial inbound interest.” According to Gupta, the company has heard from government and commercial partners that liquidity is a “key driver to their decisions of who to partner with.” With its latest share sale, Archer said its total liquidity is more than $2 billion.

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