IREN stock price has suffered a harsh reversal in the past few weeks, moving from the year-to-date high of $76.55 on November 5 to the current $48. This crash has erased over $11 billion in value.
Why the IREN Stock Price Has Crashed
IREN is an Australian company involved in two businesses: Bitcoin mining and artificial data centers. Its approach is to use its growing Bitcoin mining revenues and profits to invest in the fast-growing AI industry.
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The company’s Bitcoin mining operations have done well this year, thanks to the growing hash rate, which soared to 50 EH/s in June this year. This division’s revenue rose to $232 million from $180 million last year. Its growth was driven by higher Bitcoin prices and increased mining activity.
The recent IREN price action is largely due to the Bitcoin price crash from $126,300 in October to $80,000 in November. This crash means that the company’s business will struggle, especially if it remains under pressure.
In addition, IREN has declined due to challenges in the AI colocation industry. Other companies like CoreWeave, Nebius, Bitfarms, and TeraWulf have all plunged in the past few weeks. All these companies have erased billions of dollars in value in recent months.
The top concern is that companies are borrowing large sums of money, which will dilute shareholders’ interests. In its recent statement, the management noted that it raised $1 billion in convertible notes.
A convertible note is debt that is tied to a company’s stock. While it is not dilutive at first, it may become so if the lender converts the debt to equity.
Also, there are concerns about the valuation, the potential for AI to burst, and the depreciation of the GPUs it is spending billions to invest in. Depreciation risk will accelerate if Nvidia or other tech firms launch more advanced GPUs than the current ones.
Additionally, competition in the industry has escalated, giving its potential customers a choice. As such, while it received a $9.7 billion deal from Microsoft, it may struggle to get more similar deals in the future.
IREN Share Price Technical Analysis
The daily chart shows that IREN stock has dropped over the past few days. This decline has pushed its price below the Major S/R pivot point of the Murrey Math Lines tool.
The current price is along the neckline of the double-top pattern. A double-top is one of the most common bearish patterns in technical analysis.
It has dropped below the 50-day Exponential Moving Average (EMA), while key oscillators have retreated. Therefore, the most likely IREN stock forecast is bearish, with the next target being the ultimate support at $25.
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