The IREN stock price made a strong bearish breakout on Monday as it plunged to its lowest level since September this year. It has now erased some of the gains it made a few months ago when it jumped from $5 to $76. This article explores why the IREN share price has crashed and the next key level to watch.
IREN stock is crashing amid AI jitters
The main reason why the IREN stock price is in a deep bear market is the ongoing jitters surrounding the artificial intelligence industry, which is starting to show cracks.
These cracks intensified last week when Oracle published its quarterly financial results. While its revenue and backlog growth were strong, its debt soared, and free cash flow turned negative.
These results pushed most AI stocks lower, with Nvidia falling to $176, down by 17% from its highest level this year. Broadcom stock dropped to $340, down sharply from the year-to-date high of $413.
IREN’s competitors have remained in a bear market this year, with CoreWeave trading at $72, down from the year-to-date high of $186. Bitfarms stock dropped to $2.5 from $6.5 earlier this year.
Investors are simply concerned that the AI hype that propelled IREN and similar companies into multi-billion dollar empires is starting to fade.
Dilution and competition concerns remain
IREN stock price has also tumbled because of the ongoing concerns about competition in the AI infrastructure industry, where the number of companies offering the same service has jumped.
Some of the top companies offering these services are CoreWeave, Oracle, Nebius, and Bitfarms.
The impact of all this is that the most important customers, who include hyperscalers like Microsoft, Meta Platforms, and Google will now have alternatives when selecting their partners.
IREN has already received a $9.7 billion order from Microsoft, but is yet to announce another one since that.
At the same time, the company will likely continue being highly dilutive as it ramps up its data center expansion. In a statement this month, the company said that it was raising money through debt and equity.
IREN is raising $1 billion in a private offering in convertible notes due 2032 and another $1 billion due in 2033. It also raised money in forms of convertible notes due in 2029 and 2030.
Therefore, the company’s outstanding shares has continued rising in the past few years. Its outstanding shares rose to 282.7 million, much higher than last year’s low of 138.4 million.
The IREN share price has continued falling because of the ongoing Bitcoin price crash. Bitcoin has dropped from the year-to-date high of $126,200 in October to the current $85,000. This is important as IREN still makes most of its money from its Bitcoin mining operations.
The most recent results showed that the company’s revenue rose to $240 million, with its net income rising to $384 million. Its profit included its unrealized gains, prepaid forwards, and the capped calls in terms of its convertible notes.
IREN share price technical analysis
The daily timeframe chart shows that the IREN share price has crashed from the year-to-date high of $75.85 in November to the current $35. It has dropped below the important support level at $48.40, the neckline of the double-top pattern.
IREN has moved below the 50-day and 100-day Exponential Moving Averages (EMA) and the 50% Fibonacci Retracement level at $41. Also, the Relative Strength Index (RSI) and the MACD have continued moving downwards.
Therefore, the stock will likely continue falling as sellers target the key psychological level at $20, which is 42% below the current level. This price also coincides with the 78.6% Fibonacci Retracement level.
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