IREN's 8.26X P/B Suggests Stretched Valuation: Hold or Fold the Stock?

Core Insights - IREN Limited (IREN) shares are considered overvalued with a Value Score of F, trading at a forward price/book ratio of 8.26X compared to industry and sector averages of 3.53X and 4.25X respectively [1][7] - The company has experienced significant revenue growth, with a 29.4% sequential increase to $187.3 million in Q4 of fiscal 2025, driven by bitcoin mining and AI Cloud services [3][7] - IREN's stock has surged 462.1% year-to-date, outperforming both the sector's return of 13.2% and the Zacks Financial Miscellaneous Services industry's appreciation of 2.6% [5] Financial Performance - Bitcoin revenues reached $180.3 million in Q4 of fiscal 2025, up 27.7% sequentially, with the company mining 1,825 bitcoins at an average revenue of $98.8 per bitcoin [3] - AI Cloud services revenues accelerated to $7 million in Q4 of fiscal 2025, up from $3.6 million in the previous quarter, indicating rapid expansion in this segment [4] - IREN is on track to achieve $1.25 billion in annualized revenues by December 2025, with approximately $1 billion from bitcoin mining and $200-$250 million from AI Cloud [14] Growth Prospects - The company has installed a hashrate of 50 EH/s, generating an estimated $830 million in annualized hardware profit [13] - IREN plans to scale its GPU operations from 1.9k to 10.9k GPUs, including next-generation systems from NVIDIA [14][16] - The company expects to achieve $500 million in AI Cloud annualized run-rate revenue by Q1 of fiscal 2026 [16] Liquidity and Financing - As of June 30, 2025, IREN had $564.5 million in cash and cash equivalents, positioning it well for expansion [17] - The company has secured financing for GPU purchases, funding 100% of the $200 million price at favorable rates [17][18] Earnings Estimates - The Zacks Consensus Estimate for Q1 of fiscal 2026 earnings is 17 cents per share, down by a penny over the past 30 days, with revenues expected at $236.7 million [19] - For fiscal 2026, the earnings estimate is 70 cents per share, reflecting a 35.2% decrease over the past month, while revenues are projected to increase by 122.3% from fiscal 2024 [20]