TLDR
- IREN stock tumbled 11.5% to $39.79 Thursday following Q2 earnings miss with ($0.52) EPS loss versus ($0.07) consensus and $184.7M revenue versus $229.6M expected.
- Net income reversed from $384.6M profit in Q1 to ($155.4M) loss in Q2, a concerning $540M quarterly swing for investors.
- Consensus analyst rating remains “Moderate Buy” with $69.36 average target despite earnings shortfall and stock decline.
- Microsoft AI partnership progress is the primary catalyst analysts are monitoring for potential stock recovery.
- Bitcoin correlation and new inverse ETF products are increasing short-term volatility and trading risk.
IREN stock plummeted 11.5% Thursday after delivering a second-quarter earnings report that fell well below expectations. The stock closed at $39.79, down sharply from Wednesday’s $44.94 close.
The company reported a loss of ($0.52) per share. Analysts had projected a loss of just ($0.07). That represents a miss of ($0.45) per share, far worse than the Street anticipated.
Top-line results were equally disappointing. Revenue came in at $184.7 million versus the $229.6 million consensus forecast. The company missed revenue estimates by roughly $45 million or 20%.
Trading activity spiked as investors reacted to the news. Volume climbed 35% to 60.4 million shares compared to the typical 44.8 million daily average. The stock hit an intraday low of $38.90 during the session.
Profitability Reversal Shocks Investors
The quarterly profitability swing caught many by surprise. IREN posted a net loss of ($155.4M) in the second quarter. Just one quarter earlier, the company had reported a profit of $384.6 million.
That $540 million reversal in net income over three months raises serious questions. Investors are now questioning whether the previous quarter’s profitability was sustainable or an anomaly.
Co-CEO Daniel Roberts attempted to focus on positives in the earnings release. He highlighted the company’s 4.5 gigawatts of secured power capacity. He also pointed to a $3.4 billion annual recurring revenue target.
Roberts emphasized strong customer demand and reliable delivery execution. However, the financial results don’t currently support the optimistic narrative.
Analysts Haven’t Given Up Yet
Despite the brutal quarter, Wall Street maintains relatively bullish positioning. The consensus rating stands at “Moderate Buy” across analyst coverage. Thirteen analysts rate the stock a buy, five assign hold ratings, and just one recommends selling.
The average price target of $69.36 suggests significant upside potential from current levels. That target implies a 74% gain if the stock can recover. Roth MKM holds the most bullish view with a $94 target and buy rating.
Citigroup initiated coverage with an outperform rating last November. Citizens JMP rates the stock market outperform with an $80 price objective. UBS Group maintains its buy recommendation.
The potential Microsoft AI partnership represents the key wildcard. Analysts believe successful execution on that front could dramatically change the stock’s trajectory. But right now, it’s just potential without proven results.
High Volatility Environment Continues
IREN’s connection to cryptocurrency markets adds another risk layer. The stock tends to move in line with Bitcoin prices. When crypto weakens, IREN typically follows suit.
The introduction of the Tradr 2X Short Iren Daily ETF creates additional dynamics. Inverse ETF products can amplify volatility during downturns. They provide easy access for traders looking to bet against the stock.
Retail investors flagged unusual pre-earnings price action. The stock dropped 14% before the actual earnings release. Some traders suggested manipulation, though no evidence supports those claims.
Institutional ownership currently sits at 41.08% of shares outstanding. Hood River Capital Management established a fresh $74.2 million position during Q2. Situational Awareness LP increased its stake by 90.1% to 6.4 million shares worth $93.3 million.
Voloridge Investment Management grew its holdings by 1,444.5% in Q3. Marshall Wace LLP expanded its position by 247.7% to approximately 2 million shares valued at $95.4 million.
The balance sheet shows a debt-to-equity ratio of 0.34 and current ratio of 5.52. Market capitalization stands at $11.28 billion. The price-to-earnings ratio is 20.51 based on current trading levels.
The stock’s beta of 4.27 indicates extreme volatility compared to the broader market. Shares now trade below both the 50-day moving average of $46.78 and the 200-day moving average of $42.27.
