IREN Stock After the Selloff: Under 1% Interest on $6.7 Billion of Debt, and One Microsoft Delivery Left
IREN stock lost about 39% in October alongside CoreWeave, though most of IREN's debt pays under 1% and Microsoft prepays its contract. Three Childress buildings due by December decide the rest.
IREN stock fell with CoreWeave in October, though most of IREN's debt pays under 1%. Three buildings in Childress, Texas, due to Microsoft before the year ends, decide what happens next.
IREN stock closed Friday a few cents above its 52-week low, and the company has picked November 5 for its next earnings report. The shares were $40.88 at the end of September and $24.91 on Friday, so October has taken about 39% off the price. Most of the damage came on days when CoreWeave, the biggest of the neoclouds (companies that rent Nvidia GPUs to AI labs and big tech), fell too, after CoreWeave's bonds slid toward 80 cents on the dollar and Gartner published a report saying most neoclouds won't survive on their own.
I think the market is selling IREN stock as if it had CoreWeave's balance sheet, and the filings say it doesn't. IREN's bigger risk is a construction schedule, because three liquid-cooled buildings for Microsoft are due this quarter and most of the bull case runs through them. So my read after the selloff is bullish, for reasons I'll lay out below. None of this is investment advice, it's my read of the public filings.
The Microsoft delivery IREN stock rides on
IREN signed a five-year, $9.7 billion contract with Microsoft last November. It covers four 50 MW buildings, called Horizons 1 through 4, at the Childress campus, a former Bitcoin mining site that IREN owns. Each building is filled with Nvidia GB300 racks. Microsoft accepted Horizon 1 in August, and Horizons 2 through 4 are targeted for delivery in phases in the fourth quarter.
You can see why those three buildings matter in IREN's own targets. The company had about $1 billion of annual revenue running in late August and wants $4 billion of contracted revenue live by December 31. By my math Horizons 2 through 4 are worth about $1.46 billion a year, a bit more than a third of that target. So those three buildings decide IREN's AI cloud revenue, because Microsoft starts paying its monthly fee on each one only after it signs off.
The schedule has some slack. The 10-K says the contract's grace periods run from the middle of this quarter to the start of the second quarter of 2027. But it also lists delay credits and Microsoft's right to cut capacity or terminate, and this week an investor claimed Horizon 2 faces a delay of up to 45 days over a networking redesign. Neither IREN nor Microsoft has confirmed that. (A 45-day slip would still land inside the grace period, so I'd wait for November 5 before panicking.)
Who takes the loss if Childress slips
Nvidia doesn't. It already sold the GPUs, and IREN paid for them with a $3.65 billion GPU loan plus Microsoft's prepayment, which together cover 96% of the hardware bill. Microsoft prepays 20% of each building's value before delivery. IREN booked $1.84 billion of deferred revenue last fiscal year, which is cash customers paid ahead of service.
The $3.65 billion loan sits in a separate company that holds the Microsoft GPUs, so lenders can claim those chips and the contract but not the rest of IREN. It blends out to about 6% a year. The catch is a guarantee from IREN itself. If Microsoft validly terminates a building and IREN can't find a new tenant for it, IREN owes that building's debt, minus whatever the GPUs sell for. That guarantee steps down as each building moves into the secured structure, which IREN expects to finish by the end of 2026. So a short delay costs IREN some credits, while a long one lands on IREN shareholders.
IREN's debt next to CoreWeave's
CoreWeave had $35.55 billion of debt at the end of June. Its second-quarter interest bill was $640 million, while the business lost $49 million before interest. Its 9.625% notes due 2032, sold in June, fell below 80 cents in mid-October, and at that price buyers earn close to 15% a year. (We walked through why lenders charge CoreWeave so much in our neocloud explainer.)
IREN had $7.7 billion of debt at June 30, and $6.75 billion of that is convertible notes, bonds the holders can swap for stock. Their coupons average under 1% by my math. IREN's interest expense for the whole fiscal year was $46.6 million. It also held $5.9 billion of cash, so net debt was about $1.8 billion.
Those convertibles aren't free money. The biggest, $3 billion due in December 2033, converts at $73.07, nearly three times today's price, so unless the stock recovers IREN repays it in cash or refinances. IREN's newer money also costs more. In August it closed a $2.4 billion financing led by Blue Owl at a fixed 9%.
IREN's valuation and free cash flow
On free cash flow IREN looks terrible, and that's how a company building ahead of its contracts is supposed to look. Operating cash flow was $2.1 billion in fiscal 2026 while capex was $4.3 billion, so free cash flow came to about minus $2.2 billion. It gets bigger from here. The summary of IREN's results on Investing.com puts fiscal 2027 capex guidance at $25 billion to $30 billion, which IREN hasn't fully funded.
So the more useful yardstick is enterprise value (market value plus net debt) against contracted revenue. IREN's enterprise value was $11.76 billion on Friday. Against $4 billion of contracted annual revenue that's under 3 times, and TIKR puts it near 7 times next year's EBITDA.
Analysts split after the drop. BTIG reaffirmed Buy with an $80 target, while Morningstar cut its fair value to $37 on October 16. Short sellers held about 21% of the float at the end of September, per Nasdaq's short interest data, which is a lot of people betting against a company with a Microsoft prepayment in the bank.
Why I'm bullish on IREN stock after the selloff
IREN owns its land and its power, which most neoclouds don't. Its Sweetwater site in Texas had 1.4 GW energized in May, and the 10-K lists sites adding up to about 5.6 GW across Texas, Oklahoma, Canada, Australia and Spain. Microsoft also isn't the only tenant. Nvidia signed its own five-year, $3.4 billion contract with IREN in May, and Perplexity, Together AI and Prometheus signed about $2.8 billion more in July.
Put that next to the price. IREN borrowed most of its money at under 1% before the selloff, its biggest contract comes with a prepayment and an A-rated loan behind it, and the stock now trades at under 3 times contracted revenue. CoreWeave's bond market is a fair worry for CoreWeave. I don't think it describes IREN, and the two stocks have been trading as one.
The risks are the December deliveries, a fiscal 2027 capex plan two to three times IREN's market value, and new debt that costs 9%. If Horizons 2 through 4 slip past the grace periods, IREN shareholders carry the guarantee. I think the price already pays for that risk, and it's one you can check every quarter.
November 5 is IREN's first report since Horizon 1 went live, and I'm listening for one sentence about Horizons 2 through 4. If they're on schedule, a company paying under 1% on most of its debt is still trading like one that pays 15%.
Disclaimer: this article is research and commentary for general information. It isn't investment advice, so do your own work before you buy or sell anything.