🫀Core(Weave) values

CoreWeave, which provides GPU cloud services to AI developers, is buying Core Scientific, which handles the nitty-gritty of those data centers, in a deal valued approximately at $9 billion. 

The “approximately” is actually rather important here, as there’s a bit of a funny situation developing with the companies’ respective valuations following the announcement of the tie-up, which presents some intriguing arbitrage opportunities. 

• The actual terms of the deal specify that someone who owns one share of Core Scientific will receive 0.1235 shares of CoreWeave when the transaction goes through, currently slated for the fourth quarter. That fixed ratio means those fractional shares of CoreWeave would be worth $20.40 at the time of the announcement.

• Alas, it’s not so simple. As of yesterday afternoon, CoreWeave was trading at about $154.30, with Core Scientific around $14.40. Applying the fixed exchange ratio, Core Scientific “should” be trading at about $19.06. 

• Normally, this is where you’d expect merger arbitrageurs to step in and remedy this massive discrepancy. Buy Core Scientific, short CoreWeave, and profit once the deal goes through.

The issue, though? The borrow rate is reportedly well over 100% annualized, with anecdotal reports of 300%. Per Bloomberg, CoreWeave’s “float” (or freely traded shares) amounts to only ~13% of its shares outstanding. Once you account for that, any “free money” lying around disappears.

The Takeaway

The devil is always in the details. In sum, Core Scientific’s management hitched their wagon to CoreWeave to trade at a premium; put themselves in a position for downward pressure on the company’s stock, possibly lowering the ultimate value they’ll get for selling; and left seemingly no practical way for shareholders or potential shareholders to arb this away for a while. 

Read more.

So far, President Trump’s tariffs have spared the pharmaceutical industry, but the threat remains. Just yesterday, Trump raised the possibility of an eye-popping 200% tariff on imported drugs “very soon,” a figure that would put many patients at risk of not being able to afford critical medications. Of course, Trump also said the companies would have “a year, year and a half” before those tariffs would go into effect.

In any case, it appears Eli Lilly isn’t taking any chances with its top revenue driver: 

• Lilly’s blockbuster diabetes and weight-loss shots, Mounjaro and Zepbound, are made in Ireland. 

• Nearly all of the imports for that category since 2018 had a final destination of Indiana, where Lilly is based. 

• And as of this May, the US has imported nearly 3x as many peptides and protein-based hormones (the category that GLP-1s fall under) from Ireland as it did in 2024, as you can see in this stunning chart. 

It’s not the only pharma company that’s been front-running tariffs, but it’s certainly among the biggest, with $42.3 billion of its GLP-1s imported through May alone. While the race is certainly still on to create the next blockbuster weight-loss drug, Lilly is sticking with its hit medications.

The Takeaway

Shortages of weight-loss meds may not seem like the most pressing issue, but for the big players, they’re huge profit drivers that have also shown promise in areas like treating addiction and sleep apnea, among others. Additionally, Eli Lilly and Novo Nordisk, the maker of Ozempic, also want to avoid their popular meds falling back into the “shortage” categorization that allowed companies like Hims & Hers to sell copycat drugs. That not only ate into profits but also turned into a messy public breakup for some involved.

Read more.

Grindr has decided to build a side hustle selling pills — very specific pills that appeal particularly to their audience. The clue of what it’s selling comes from the new name of its telehealth brand: Woodwork. And unlike the first ads of the ’90s, which used a former GOP presidential candidate to promote a little blue pill, Grindr’s ads are not afraid to lean into lumberjack-coded models holding logs in suggestive places.

See the ad-volution.

• Clean energy stocks slumped as Trump looks to tighten access to tax credits from his just-passed bill

• Sequans Communications, a tiny semiconductor company, jumped over 40% after raising 7x its market value to buy bitcoin

• Sportsbook marketing firm SharpLink Gaming soared on news that it’s acquiring ethereum  

• SoundHound AI rose after a surge in call options triggered a short squeeze

• Tech companies pledge $23 million to train teachers to use AI in the classroom

• Trump threatens 10% additional tariffs on countries backing “anti-American” BRICS policies

• Porsche’s business in China is getting worse with each passing quarter

• Analyst says Tesla’s board must “act now and set the ground rules” around Musk’s political ambitions. Musk had a strong reply 

• Wall Street says chase the rally, with Goldman Sachs and Bank of America upping their S&P 500 price targets