JPMorgan Just Downgraded IREN Stock. Here Is Where Options Data Tells Us It Could Be Headed Next.

Core Viewpoint - Iren (IREN) shares experienced a 10% decline following a downgrade by JPMorgan analyst Reginald Smith, who set a price target of $24, suggesting a potential 40% further drop from current levels [1][3]. Valuation Concerns - The downgrade was primarily due to valuation concerns, with IREN trading at a forward price-earnings (P/E) ratio of approximately 67x, significantly higher than leading AI stocks like Nvidia, which trades at 42x [3]. - The current share price is believed to reflect overly optimistic scenarios, particularly regarding a potential colocation deal that may require over $10 billion in capital expenditure [4]. Revenue Generation and Execution Risks - Without concrete revenue-generating deals, the premium on IREN stock is difficult to justify, despite the company's ambitions in artificial intelligence (AI) and high-performance computing (HPC) [4][5]. - Options data indicates heightened volatility, with a near-term expected move of 10.18% through the end of next week, and broader contracts suggest a potential price range from $25.66 to $57.18 [4][5]. Market Sentiment - Other Wall Street firms are also advising caution regarding IREN shares, indicating a consensus rating of "Moderate Buy" with a mean target of approximately $36, which implies a potential downside of another 10% [6][7].