IREN stock price has crashed in the past few weeks as it came under intense short-selling pressure. It dropped to $44.83, down sharply from the year-to-date high of $76.85.
Short Interest Has Soared as Risks Rose
IREN, a company in the Bitcoin mining industry and artificial intelligence infrastructure industries, has been in the limelight as it surged from a low of $5 in April to a high of $76 in November.
The surge came as the company unveiled plans to emulate CoreWeave, a company that started as a Bitcoin miner and has since become a giant in the AI industry.
It has now acquired thousands of GPUs and received a giant $9.7 billion order from Microsoft. It has promised to generate hundreds of millions of dollars in annual recurring revenue in the coming year.
Still, short sellers have gained momentum, pushing the stock’s short interest to a record high of 24%, making it one of the most shorted companies on Wall Street. This means that these investors expect the stock to continue falling in the coming weeks or months.
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Other similar companies have seen their short interest soar as investors remained concerned about their cash burn, competition, dilution, and the potential bursting of the AI bubble. CoreWeave’s short interest has risen to 8.53%, while Nebius’s has increased to 11.95%.
Investors are concerned about rising competition in the industry, a move that will give potential customers more negotiating power and may hurt its margins in the long term.
Additionally, IREN has not announced any major deals since its deal with Microsoft, a sign that the sector is becoming increasingly challenging by the day.
At the same time, the company has struggled as the Bitcoin price has pulled back in the past few months, moving from a high of $126,200 in October to $92,000.
While IREN has become a major player in the AI industry, it currently generates most of its revenue from Bitcoin mining. Its recent results showed that its Bitcoin mining revenue rose by 129% to $232.9 million, while its AI cloud services revenue rose to $7.3 million.
IREN Stock Price Technical Analysis
Technicals suggest the IREN stock price could be at risk of further downside in the near term, as it has formed a series of bearish chart patterns. It formed a double-top pattern at $74 and a neckline at $48.40.
The stock has formed a bearish pennant pattern, which consists of a vertical line and a symmetrical triangle. It has also moved below the 50-day Exponential Moving Average (EMA).
Therefore, the most likely scenario is where it drops sharply in the next few days as the short interest rises. If this happens, the next key support level to watch will be the 61.8% Fibonacci Retracement level at $32. A move above the $48.40 resistance will invalidate the bearish outlook.
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