IREN - Iris Energy: Deprived Of Any Investment Value Position

2024-01-22 09:52:27 ET

Summary

• IREN did not violate our previous thesis but new observations prompted us to update.
• Firstly, IREN's non-cash book value margin safety is only temporal due to the lack of Bitcoin holdings.
• Secondly, IREN is not expected to generate material shareholder distributable earnings even during the upcoming bull run.
• As a result, IREN's ambitious expansion plan could result in only more shareholder dilution without shareholder benefits.
• IREN's problem is not a valuation problem, but a fundamental one.

Introduction

In our previous coverage, we suggested that Iris Energy ( IREN ) is not a lost cause despite the loan default, is investible below $2.90 , and could enjoy a short-term 146% (based on 9.1 EH/s capacity) upside potential should Bitcoin ( BTC-USD ) reclaim its all-time high (ATH). This thesis was primarily founded on several observations:

1. IREN was trading below its book value or our adjusted net asset value...

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