Shares in Bitcoin miner IREN (IREN) recovered on Wednesday, jumping nearly 7% after the company announced a massive $3.63 billion capital-raising effort. The company plans to use the funds to pivot aggressively and deploy new computers to meet the surging demand for Artificial Intelligence (AI) compute power.
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IREN stock climbed 7.6% to a peak of $44.25 during trading, slightly regaining ground after falling over 15% on Tuesday following the initial announcement of its capital-raising plans. The move places IREN at the forefront of a growing trend where miners are taking on significant debt to meet AI demands.
$3.6 Billion Capital-Raise Triggers Volatility
IREN’s $3.63 billion fundraising is split into two parts: a new $2 billion convertible note offering and a simultaneous share sale to raise an additional $1.63 billion in equity.
Share and note offerings often worry investors because the generation of new stock can spark dilution fears, devaluing existing holdings. This fear likely triggered the stock’s sharp decline on Tuesday. The combined debt and convertible note offerings from 15 public miners were estimated to be $4.6 billion in late 2024 alone, highlighting the scale of IREN’s move.
Dilution Fears Countered By Balance Sheet Move
The stock’s recovery on Wednesday may be connected to strategic moves IREN announced to restructure its balance sheet and address dilution risks.
The company stated it will use some of the equity proceeds to repurchase the convertible notes. Furthermore, it will spend $174.8 million on capped call transactions. These moves are designed to reduce the risk of dilution and instill confidence in the long-term price for shareholders.
Traders Buy The Dip Despite Inverse Cramer Effect
The stock’s rebound was swift, despite a critical comment from CNBC markets commentator Jim Cramer. Cramer publicly criticized the move, advising shareholders to “Sell any company NOW that is doing a financing (a la IREN).”
Cramer’s advice often triggers the internet’s “inverse Cramer” effect, where many traders bet against his calls. The surge in IREN stock suggests that traders may have either bought the dip after the initial Tuesday drop or were betting against Cramer’s negative outlook. The share price remains down from its October all-time high of over $62.
Is IREN a Good Stock to Buy?
Wall Street remains moderately bullish on IREN stock. Out of 12 analysts, nine rate the stock a Buy, one suggests a Hold, and two recommend a Sell. This gives it an overall “Moderate Buy” consensus. The average 12-month IREN price target stands at $84, implying a 91% upside from the last close.
