- IREN stock has rebounded in the past few weeks.
- The company’s business is seeing strong revenue growth.
- There are concerns about its soaring debt and dilution.
IREN stock price continued its strong rally this week, reaching its highest level since February 3rd. It has soared by over 65% from its lowest level this year, even as the company faces some major challenges.
Why IREN is Facing Some Major Headwinds
IREN, a top Bitcoin mining and neocloud, is doing well, with its revenue expected to keep growing in the coming years.
Yahoo Finance data shows that analysts expect that its revenue will jump by 97% this year to $1.01 billion. Analysts also expect the revenue to jump by 192% to over $2.92 billion next year.
Most of this revenue growth is mostly because of the $9.7 billion deal with Microsoft that was reached last year. It will also likely attract more customers as the AI demand continues.
Still, the company is facing some major challenges. The most notable one is that CoreWeave and Nebius have become the biggest players in the neocloud industry.
CoreWeave has recently attracted deals with companies like Anthropic, Microsoft, and ChatGPT. It now has a backlog of over $60 billion.
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Similarly, Nebius recently signed a $27 billion deal with Meta Platforms. It also signed a deal with Microsoft worth over $19 billion. NVIDIA recently invested $2 billion in each of these companies.
On the other hand, IREN has not announced a major deal with other large companies after the one with Microsoft. At the same time, more companies like Bitfarms, TeraWulf, and Mara Holdings have moved to the industry.
At the same time, IREN plans to dilute its shareholders to fund its data center ramp-up. It recently announced that it expanded its ATM to $6 billion, a notable amount for a company with a market capitalization of over $17 billion.
The company’s debt has also continued soaring this year, a trend that will continue growing in the near term. It ended the last quarter with over $3.6 billion in convertible debt payable and $4.5 billion in total liabilities.
These fears explain why the short interest has continued rising in the past few months and currently stands at 17%.
IREN Stock Price Technical Analysis
IREN stock chart | Source: TradingView
The daily chart shows that the IREN share price has rebounded in the past few weeks. It has rebounded from a low of $30 earlier this month to the current $51.
The stock has jumped above the 50-day and 100-day moving averages, a sign that the momentum is continuing. It has jumped above the 38.2% Fibonacci Retracement level.
It also formed a double-bottom pattern, a popular reversal. Therefore, the stock will likely continue rising as bulls target the key resistance level at $63.60, its highest point in January.
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