Why Core Scientific Stock Stumbled Today

Core Scientific (NASDAQ: CORZ) didn't start the stock trading week on a high note. The crypto miner and data center operator saw its share price tank by almost 9% on an analyst's recommendation downgrade.

Hold on a moment, says analyst

The pundit behind the downgrade was Keefe, Bruyette & Woods' Bill Papanastasiou, who moved his assessment of Core Scientific down one peg to market perform (hold, in other words) from his previous outperform (buy). He also reduced his price target to $25 per share from $28.

Like other legacy cryptocurrency miners, Core Scientific has effected a strategic pivot into artificial intelligence (AI) data center operations. According to reports, Papanastasiou wrote in his update that this effort has been halting lately.

He said that the company has gone roughly 17 months without signing a new colocation lease for this part of its operations. It's also committed to spending around $2 billion on acquisitions and development activities this year, but lacks the fresh business that could meaningfully support this.

The great AI data center race

To this analysis, I would add that, since the miner-to-data-center-operator pivot is now common in Core Scientific's industry, the company feels like it's notably lagging some of its peers.

While I still believe this strategy is viable and potentially very lucrative, I think shareholders will need some indication of progress and dynamism soon if this company and its stock aren't to be left behind.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.