So, you want to build more data centers? You're going to need some cash. That's the simple math behind the move from Core Scientific Inc. (CORZ) on Thursday.
The company, which operates large-scale data centers for high-performance computing (think bitcoin mining and AI workloads), announced it has completed the initial closing on a $500 million loan facility from Morgan Stanley (MS). It's a 364-day loan, and the interest rate is set at the Secured Overnight Financing Rate (SOFR) plus 250 basis points, or 2.50%.
Here's the kicker: the deal includes an "accordion feature." That's banker-speak for an option to expand. Core Scientific can potentially increase the total loan commitment by another $500 million, bringing the whole package up to a cool $1 billion, assuming it meets the usual terms and conditions.
Why does a company need a half-billion-dollar line of credit? To build stuff, of course.
"This strengthens our liquidity and enhances our financial flexibility as we execute our development and go-to-market strategy," said Adam Sullivan, Core Scientific's CEO. "With this additional financing capacity, we can operate decisively by deploying capital to expedite project ready-for-service timelines, making us an even more compelling infrastructure provider for customers."
In plain English, the money is for general corporate purposes tied to building more data centers. That means buying equipment, covering pre-development costs, acquiring real estate, and—critically—securing more energy supply agreements. Running a warehouse full of powerful computers uses a lot of electricity, so locking down power is a key part of the business.
Financing Meets a Mixed Financial Picture
The big loan news comes just after the company reported its fourth-quarter earnings this week, and the numbers weren't exactly a home run.
Core Scientific posted an adjusted loss of 29 cents per share, which was wider than the consensus estimate for an 18-cent loss. Sales also fell, dropping from $94.9 million a year ago to $79.76 million, missing the consensus estimate of $105.71 million.
On the brighter side, the company ended the quarter with a liquidity position of $533.4 million. That's made up of $311.4 million in cash and $222.0 million worth of Bitcoin (BTC) on its balance sheet. So, it wasn't exactly broke before the Morgan Stanley loan showed up.
What's the Stock Telling Us?
If you look at Core Scientific's stock chart over the past year, you see a story of strong investor confidence—the share price is up 61.5%. But zoom in on the recent action, and the picture gets a bit fuzzier.
The stock is currently trading below all its key moving averages. It's sitting about 9.6% below its 20-day simple moving average and 11.2% below its 100-day average. That suggests some short-term selling pressure, even with the longer-term uptrend.
The technical indicators are sending mixed signals, too. The Relative Strength Index (RSI) is at 42.40, which is generally considered neutral territory—not overbought, not oversold. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator is flashing a bearish signal, with the MACD line sitting below the signal line. This technical setup hints that the stock might face some near-term headwinds despite its solid yearly performance.
On Thursday, the stock was feeling that pressure, trading down 3.85% at $15.23.
