IREN Forensic Analysis

PART 1: TRADING EXECUTION

1. Trading Setup & Entry Strategy

Setup: Momentum Reversal / Trend Reclamation IREN has printed a violent +14.99% reversal, bouncing off oversold conditions. While the trend is technically BEARISH_CROSSING (Price < 50SMA), the massive volume and price action suggest the correction is terminating. We are playing the reclamation of the 50-Day SMA ($50.28).

• •Primary Entry Zone ($45.00 - $46.50): Enter 40% of position here. The stock is snapping back from a correction; RSI at 42 suggests ample room for upside before overbought conditions return.
• •Add Zone 1 ($50.30+): Add 40% ONLY on a confirmed daily close above the 50-Day SMA ($50.28). This confirms the medium-term uptrend is intact and invalidates the "dead cat bounce" thesis.
• •Add Zone 2 (Pullback to $41.20): If price retraces to the 5-Day SMA ($41.16), add the final 20% provided $40 support holds.
• •Stop Loss: HARD STOP at $37.50. This is below the 10-Day SMA and recent swing lows. If $37.50 breaks, the structure fails, and the price will magnetize to the 200-Day SMA ($26.83).
• •Take Profit: Trim 30% at $55.00 (Psychological/Structural), Trim 40% at $65.00 (Recent Options Activity Highs), Hold 30% for parabolic runner.
• •Timeframe: 2-10 Days. AI/Crypto beta is high; do not marry this trade if momentum stalls at $50.

2. Executive Summary

Thesis: IREN is executing a massive pivot from pure-play Bitcoin mining to AI Hyperscale Infrastructure ($9.7B Microsoft Deal). While the Operating Loss of $76.4M is ugly, the market is pricing in the future cash flows of the AI transition. With cash of $1.03B, they have the runway to execute near-term capex, though dilution remains a chronic risk.

Key Metrics:

• •Revenue Growth: +355% YoY ($240.3M vs $52.8M)
• •Cash Position: $1.03B (Strong liquidity buffer)
• •Implied Volatility: High (Beta to Bitcoin + AI Sector)
• •Date: 2025-12-30 | Price: $46.34

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PART 2: DETAILED RESEARCH

3. Recent Material Events (8-K Analysis)

• •Dec 2025 Filings: Recent 8-Ks confirm the operational pivot and capital markets activity. The critical context is the Nov 2025 Microsoft Agreement ($9.7B value) and Dell Purchase Agreement ($5.8B Capex). These events have fundamentally altered the valuation model from a "miner" to a "data center" play.
• •Capital Raise: The company has been aggressive with its At-The-Market (ATM) facility, raising nearly $1B. This explains the cash pile but highlights the dilution risk.

4. Insider Trading Activity

• •Activity: Recent Form 4s (Sept 2025) show mixed activity, primarily related to RSU vesting and tax obligations. There is no massive open-market insider buying to signal "undervalued," nor panic selling.
• •Signal: NEUTRAL. Management is participating in the upside via equity compensation, aligning them with the stock price, but they are not aggressively accumulating cash shares at these levels.

5. Current News & Market Context

• •Sector Tailwinds: Bitcoin reclaiming $90k and AI stocks rallying (e.g., Bitdeer, TeraWulf) provides a dual-tailwind. Media sentiment (WSJ, Motley Fool) is shifting bullish on "AI-HPC Pivots."
• •Catalyst: The market is beginning to price IREN not as a miner (10x-15x PE) but as an AI Data Center (30x-50x PE). The divergence between IREN and pure-play miners is the alpha source here.

6. Business Model Analysis

• •Revenue Mix: Currently 97% Bitcoin Mining ($232.9M), 3% AI Cloud ($7.3M). CRITICAL: The thesis depends entirely on the AI segment growing to justify the capex.
• •Pricing Power: High in AI (supply constrained), low in Bitcoin (commodity). The shift to AI Cloud improves quality of revenue significantly.

7. Financial Health

Forensic Warning: Do not be fooled by the $384M Net Income. This is accounting noise from the revaluation of derivative liabilities/assets. The business lost $76M from operations before financial engineering.

8. Valuation Analysis

• •Reverse DCF: At $46.34, the market implies a growth rate exceeding 40% for the next 5 years. Given the $9.7B Microsoft contract, this is achievable if execution is flawless.
• •Relative Value: Cheaper than pure AI plays (like CORZ or hyperscalers) but expensive for a miner. The market is pricing it as a hybrid.

9. Technical Analysis & Trade Timing

• •Trend: The stock is in a Corrective Bounce within a long-term uptrend. The 200-SMA ($26.83) is far below, indicating long-term strength.
• •Momentum: MACD has just signaled BULLISH (Histogram +0.50). RSI at 42.83 is the sweet spot—momentum is turning up, but we are not yet overbought.
• •The Trap: The 50-Day SMA is at $50.28. In a bearish crossing scenario, price often rallies to the 50-Day, fails, and rolls over. We must take partial profits or tighten stops if price rejects at $50.28.

10. Risk Factors

1. •Dilution (Severe): To fund the $5.8B Dell deal, IREN will likely need more equity or debt. Existing shareholders risk significant percentage dilution.
2. •Execution Risk (High): Building 200MW of liquid-cooled infrastructure for Microsoft is non-trivial. Delays = Penalty/Stock Crash.
3. •Bitcoin Beta: If BTC crashes, IREN will likely fall in sympathy, regardless of the AI story.

11. Short-Term Trading Strategy (2-5 Days)

• •Timeframe: SWING_2_5_DAYS
• •Plan: Play the momentum snap-back toward the 50-Day SMA.
• •Size: 3.5% of Portfolio (High Volatility).
• •Risk/Reward: 1:3. Risking ~$8 (to $37.50) to make ~$20 (to $65).
• •Scaling: Entry at market ($46.34). Add aggressively if $50.28 breaks. Cut immediately if $41.16 (5-Day SMA) fails to hold as support on a closing basis.

12. Investment Recommendation

RATING: BUY (Speculative) Conviction: 7.5/10

The asymmetry is favorable. You are buying a company with $1B in cash and a $9.7B contract backlog at a technical inflection point (oversold bounce). However, the Operating Losses and Dilution Risk prevent this from being a "Safe Hold." Treat this as a rental, not a marriage, until they prove GAAP profitability from operations.

One-Liner Thesis: IREN is effectively a call option on AI infrastructure execution, currently mispriced due to a technical correction, offering a tactical long entry as it pivots from Bitcoin mining to Hyperscale Compute.