Why Melvin holds IREN after its 50% drop from peak

GM. This is Milk Road Stocks, where sometimes the best trade starts with a question in Discord.

Today, we're talking about IREN. The stock took a beating after earnings so is this a buying opportunity… or is something actually wrong?

First, a quick detour to private markets.

On Sept 23, Milk Road's Martin sits down with Alumni Ventures to talk about blockchain and private markets. Save your free seat here.

SHOULD YOU BUY IREN AFTER FALLING 13%?

While scrolling through our PRO Discord community today, there was one point of discussion that caught my attention.

Source: Milk Road PRO

The reason IREN dropped so hard was its latest earnings report.

The main point of worry was that Adjusted EBITDA collapsed from $59.5M last quarter to $19.2M.

Source: Google

In fact, IREN’s last peak came at $70 in the first week of June. Since then, the stock has fallen 50%.

So naturally, the big question is:

Should you be buying IREN at these prices?

Melvin (our lead portfolio analyst at Milk Road PRO) still remains bullish on IREN.

The main reason for the weak quarter is that IREN is in the middle of a messy transition.

It's shutting down Bitcoin mining capacity faster than its new AI infrastructure can start generating revenue:

AI Cloud revenue jumped 110%.
While Bitcoin mining revenue dropped 40%.
Their AI division now makes up 50%+ of quarterly revenue.

So why shut down a profitable Bitcoin mining business?

Margins.

AI Cloud generated $70.5M in revenue from just $9.2M in direct costs, giving it an 87% direct gross margin.

Meanwhile, Bitcoin mining runs closer to 64%.

In other words, the same megawatt of power makes IREN significantly more money when it's used for AI instead of Bitcoin mining.

And the AI business is already starting to show real traction:

$1B of AI Cloud ARR operating today.
$4B of contracted ARR tied to its 2026 capacity.
Customers include Microsoft, NVIDIA, Cohere, Perplexity, Figure AI, and several others.

Melvin's view on IREN going into the next quarter is clear.

He remains bullish on IREN but sizes it as a smaller and higher-risk position than Nebius.

His view is that panic-selling now would mean locking in a loss while the underlying AI thesis is still intact.

For now, his plan is: hold, watch the delivery schedule closely and wait for the AI revenue to show up.

While IREN did have a messy quarter, they seem to be heading in the right direction.

ASK OUR ANALYSTS WHATEVER YOU WANT 🗣️

This edition actually started with a conversation inside the Milk Road PRO Discord.

And that’s one of the biggest benefits of being inside PRO.

You can ask our analysts questions directly.

John, Martin, Kyle, Vincen, and Melvin all have different portfolios, different strategies and often very different views on the same asset.

So instead of getting one opinion, you can hear multiple perspectives from people who are actively managing portfolios themselves.

And the Discord is just one part of PRO.

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What they're buying.
What they're selling.
What they're holding.
And, most importantly, why.

If you want to see how our analysts are positioning their portfolios and get their takes as the market moves, try Milk Road PRO for $1 for 7 days.

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