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 happened as the company unveiled plans to imitate CoreWeave, a company that emerged from being a Bitcoin miner into 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 its short interest to a record high of 24%, making it one of the most shorted companies in 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 risen to 11.95%.
Investors are concerned about the rising competition in the industry, a move that will give potential customers more negotiating power, which may hurt its margins in the long term.
Additionally, IREN has not announced any major deal since one it announced with Microsoft, a sign that the sector is becoming tougher by the day.
At the same time, the company has struggled as 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 makes most of its money in 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 that the IREN stock price could be at risk of more 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 is made up of a vertical line and a symmetrical triangle pattern. 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 resistance at $48.40 will invalidate the bearish outlook.
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