Culper Research short Core Scientific on ‘rigged deals,’ oversold businesses
In a recently published report titled “Core Scientific, Inc. (CORZ): Rigged Deals,” Culper Research says it is “short Core, as we think Core has wildly oversold both its mining and hosting businesses, which it cobbled together in a series of questionable transactions before dumping onto the public markets via SPAC.
Core’s acquired mining business, Blockcap, was formed in December 2020 with just $58.5 million, then flipped to Core for just 7 months later for $1.46 billion in connection with Core’s go-public.
We estimate Blockcap insiders made 20-25x their money.
On Monday, Core disclosed that its board waived the 180- day lockup on over 282 million shares, making them free to be dumped just 5 trading days from today.
We believe this shows insiders have abandoned any pretense of care for minority shareholders.”
“We think Core is no exception to what’s become a steady drumbeat of egregious projections made by many SPACs. We think both Core’s hosting business and its self-mining business have been wildly overhyped, and it’s no wonder that insiders can’t even wait 6 months to clamor for the exits,” the report reads.
“We also think Core has wildly overhyped the profitability of its self-mining business, where we estimate all-in breakeven costs of $41,723 per BTC (Bitcoin) vs. the Company’s SPAC claims of $2,700 just in power costs per BTC.
As such, we see Core as effectively using public markets to throw good money after bad while insiders set themselves up to dump billions worth of stock.”
In Thursday trading, shares of Core Scientific have dropped almost 3% to $7.50.
According to Wikipedia, being short in an asset means investing in such a way that the investor will profit if the value of the asset falls. This is the opposite of a more conventional “long” position, where the investor will profit if the value of the asset rises.
There are a number of ways of achieving a short position. The most fundamental method is “physical”ย selling shortย orย short-selling, which involves borrowing assets (oftenย securitiesย such asย sharesย orย bonds) and selling them. The investor will later purchase the same number of the same type of securities in order to return them to the lender.
Core Scientific, Inc. (CORZ) last traded at $7.15.
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