- 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 its revenue to 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 due to the $9.7 billion deal with Microsoft reached last year. It will also likely attract more customers as the AI demand continues.
Still, the company faces major challenges. The most notable one is that CoreWeave and Nebius have become the biggest players in the neocloud industry.
CoreWeave has recently secured deals with companies such as 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 any major deals with other large companies since the one with Microsoft. At the same time, more companies, such as Bitfarms, TeraWulf, and Mara Holdings, have entered 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 to soar this year, a trend that will likely continue to grow 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 short interest has continued to rise over the past few months and currently stands at 17%.
IREN Stock Price Technical Analysis
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, a popular reversal pattern. Therefore, the stock will likely continue rising as bulls target the key resistance level at $63.60, its January high.
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