I researched Iren on my own, and bought, but after talking with a friend who has a very good track record in stocks, sold it at a nice profit. First of all, it is very hard to give to do a good valuation on it. Also, there is a class action suit against them for misleading statements too investors. The founders sold 100 million in stock. Some employees don’t like seeing the founders getting so rich and not sharing this with the employees. A recent Form 20-F/A indicates management concluded. The company “did not maintain an effective control environment for FY25. Internal control over financial reporting had material weaknesses, particularly around complex equity compensation and governance.” There is massive dilution. But that was not the main reason I sold them. It is this. It is common for companies to sell things at a loss to make themselves look good in front of their shareholders. They may have been talking to Microsoft for a long time and could not agree on a price. They felt pressure to look good in front of there shareholders, so offered Microsoft a price where they will end up losing money.
A lot to unpack here, let’s separate them for clarity:
1) “it is very hard to give to do a good valuation on it.”
Like most growth companies, you have to assess for yourself what the future will look like. Here’s a Google Gemini summary:
Examples of Fair Value Estimates & Analysis
BlackGoat (Yahoo Finance):
$94.84 (undervalued) based on a strong growth narrative, Microsoft AI deal, and future earnings potential.Simply Wall St:
Intrinsic value around $103-$153 (undervalued), but some P/E comparisons suggest good value relative to fair P/E.Alpha Spread:
Base case intrinsic value $34.04, making it overvalued by ~34% at a recent price of $51.89.MarketBeat:
Consensus target ~$69.36 (20.2% upside from ~$57.72).
2) “there is a class action suit against them for misleading statements too (sic) investors.”
That was dismissed in March, 2025:
https://www.courtlistener.com/docket/69231344/in-re-iris-energy-limited-securities-litigation/
Or are you referring to something else, and if so, please provide a link or at least some details.
3) “The founders sold 100 million in stock.”
First, the co-CEOs each still own between 8% and 12% of the company’s stock. Second, sales aren’t the only thing to look at. From IREN Limited Ordinary Shares (IREN) Insider Activity | Nasdaq today:
More buys than sells, and more shares bought than sold. There are many reasons founders/owners/CEOs sell shares, but only one reason insiders buy on the open market (hint: it’s bullish).
4) "A recent Form 20-F/A indicates management concluded. The company “did not maintain an effective control environment for FY25. Internal control over financial reporting had material weaknesses, particularly around complex equity compensation and governance.” "
Here’s a link:
And the full quote, which appears in the otherwise boilerplate risks section:
For example, as reported in the Annual Report on Form 20-F/A for the year ended June 30, 2025, management determined that the Company did not maintain an effective control environment, which lead to a material weakness in internal control over financial reporting that was subsequently remediated as of June 30, 2025.
So, it was fixed. If this becomes a pattern then it’d be something to worry about, but so far this appears to be isolated and perhaps a result of the company growing so quickly (which is typical).
5) "There is massive dilution. "
All of these AI cloud computing data center companies need large amounts of capital to fund their build-outs. Here’s an article agreeing with you that this is a risk, but I believe it’s a risk with all such companies (Nebius and Coreweave as well), and that this is more indicative of the company securing the funding it needs to grow.
If this concerns you, probably best to stay away from this growing sector. Quoting from that SA article:
- IREN Limited is positioned as a rising AI infrastructure play with a transformative $10B multi-year contract from Microsoft.
- IREN’s AI infrastructure revenues are expected to surge, shifting its core business away from Bitcoin mining and driving exponential revenue forecasts.
- Despite bullish Wall Street sentiment and inclusion in the IVES AI 30 list, IREN faces high execution risk and significant dilution threats from its massive Sweetwater data center buildout.
- I assign IREN a Hold rating due to substantial valuation, execution, and dilution risks, despite its high-reward potential.
6) “They may have…offered Microsoft a price where they will end up losing money.”
There’s no evidence of that that I can find. Here’s another month-old SA article:
- IREN Limited is positioned for strong AI data center growth, anchored by a $9.7 billion Microsoft contract.
- Despite sector volatility and market skepticism, IREN forecasts $3.4 billion ARR by 2026, leveraging only 16% of its data center power pipeline.
- A recent $4 billion capital raise strengthens IREN’s balance sheet, enabling GPU procurement and further data center buildout.
- The stock trades at a very compelling valuation of only ~5x 2027 adjusted EBITDA, but operational execution and debt management are critical risks to monitor.
The company forecasts explosive growth due to major contracts with hyperscalers, but the market is suddenly doubting these deals. My investment thesis is bullish on the stock, though an investor needs to hold back capital to purchase shares on any further weakness in the stock.
It’s certainly reasonable based on what we know to avoid investing in IREN, as it’s the kind of capital-intensive growth company that has execution risks, as well as risks that what it’s building may not be as valuable as the company estimates in the future. But, bringing up dismissed lawsuits and minor accounting issues (fixed), as well as speculating that management did a bad deal with Microsoft doesn’t hold water for me.