Culper Research calls out Iris Energy’s misrepresentations and overvaluation By Investing.com
Investing.com – In a research note on Thursday, Culper Research weighed in on Iris Energy Inc. Technologies Inc. (NASDAQ: INK), a company originally focused on Bitcoin mining, has now announced that it has rebranded as a high-performance computing (HPC) data center.
Kolber’s analysis suggests that this strategic shift is more superficial than substantive, and that the company’s capabilities and potential in high-performance computing are being misrepresented.
The report asserts that IREN’s current facilities, all of which were built before April 2023, are not well-equipped to handle high-performance computing workloads without significant additional investment. Furthermore, Kolber notes that the company’s co-CEOs, Daniel and Will Roberts, began selling their shares starting in February 2024, the first time since the company’s IPO.
An analysis of IREN’s flagship Childress facility reveals that it lacks essential features for high-performance computing applications, such as backup power or uninterruptible power supplies. IREN’s assertion that its air-cooled system will be sufficient for GPU clusters in Texas is also questionable given the state’s much higher temperatures than British Columbia, where IREN has previously conducted GPU testing.
Kolber also criticizes IREN’s financial statements, particularly its claim that the value of undeveloped land and energy agreements it has in place is between $5 million and $12 million per megawatt, suggesting billions of dollars in potential value. The research firm alleges that IREN has misrepresented energy cost estimates. Morgan Stanley (NYSE:) Research note to prove this claim.
As a result, according to Kolber, IREN stock is significantly overvalued compared to other M&A deals and publicly listed companies. If IREN stock is valued at a multiple similar to recent M&A deals, such as CoreWeave’s offer for Core Scientific and RIOT’s offer for Bitfarms, Clean Spark If NASDAQ: made an offer to buy GRIID, the stock price could fall by 55%.
The research firm believes that IREN’s false statements will eventually be exposed and that the company will continue to burn through significant cash flow.
Using recent public deals in the sector as a benchmark, Kolber argues that Irene is clearly overvalued. The average value of these deals was $2.5 million per megawatt. If that valuation multiple were applied to Irene, its stock price would fall to $5.75, a 59% drop from its current price.
In short, the Kolber Research report suggests that Erin’s market valuation is significantly overvalued, with the analysis suggesting that the company could be worth between 52% and 79% less than its current market price on a sum-of-the-parts basis.
