- IREN stock price tumbled after announcing its NVIDIA GPU expansion plan.
- The company is raising more money, potentially diluting its shareholders.
- The stock has formed a bearish flag pattern, potentially to the key support at $33.35.
IREN stock price retreated by over 4% in the pre-market session, paring back some of the gains made a day earlier. It pulled back from a high of $44 to $42.5. This retreat occurred after the company announced plans to increase its NVIDIA GPU capacity and the potential risk of dilution.
IREN Stock Falls After Adding GPU Capacity
In a statement on Wednesday, IREN said that it was buying 50,000 NVIDIA GPUs, a sign that its business is doing well. This new order will bring its capacity to 150,000 GPUs, making it one of the biggest players in the neocloud industry.
The company aims for these GPUs to achieve an annual run rate (ARR) of over $3.7 billion by the end of the year.
While this expansion is good, the IREN stock price dived after the company announced it would raise more money to finance its operations. It has so far raised $9.3 billion using customer prepayments, convertible notes, GPU leasing, and GPU financing. Analysts believe the new financing agreement will result in more dilution.
READ MORE: XRP Price Prediction as ETF Inflows Jump and Bullish Patterns Form
The new financing came a few weeks after the company announced its financial results. Its numbers showed that revenue dropped to $184 million, down from $240 million in the same period last year.
This revenue retreated as the company continued its transition from Bitcoin mining toward AI cloud. It also posted a $155 million loss, down from $384 million in the previous quarter. Its EBITDA was a $243 million loss, mostly because of a $31.8 million impairment.
Wall Street analysts expect the company’s revenue to jump 99% this year, followed by $2.8 billion next year.
IREN stock price has remained on edge as investors focus on key potential risks. In addition to its potential dilution, the data center industry is becoming highly saturated, with most Bitcoin mining companies being in this transition. This includes companies like Bitfarms, Terawulf, Riot Platforms, and Marathon Digital.
IREN Share Price Prediction: Technical Analysis
The daily chart shows that the IREN share price has tumbled in the past few months. It has slumped from $63.60 in January to the current $41.
The stock has retreated below the 50-day Exponential Moving Average (EMA). This retreat is a sign that bears have prevailed. The stock has formed a bearish flag pattern, which is made up of a flagpole and a flag. It starts with a steep drop due to strong selling momentum and a short consolidation.
Therefore, the IREN stock price will likely tumble in the coming days, potentially to the key support level at $33.35, its lowest level in December last year.
READ MORE: Morpho Crypto Price Soars as TVL and Open Interest Surge
