After the Bitcoin miner announced plans to raise $3.6 billion through a combination of stock sales and convertible bond issuance to accelerate the deployment of computers to meet AI demands, IREN's stock price rebounded on Wednesday.
IREN (IREN) rose as much as 7.6% during Wednesday's trading to $44.25, closing at $43.96, a gain of 6.9%. Following the announcement of the fundraising plan, IREN's stock fell over 15% on Tuesday.
On Wednesday, IREN announced it would launch a new $2 billion convertible bond issuance while simultaneously conducting a stock sale to raise an additional $1.63 billion.
An increasing number of mining companies are taking on debt to transform and meet AI demands. The Miner Mag estimated in October that the total debt and convertible bond issuance of 15 listed mining companies would reach $4.6 billion in the fourth quarter of 2024, $200 million in early 2025, and $1.5 billion in the second quarter of 2025.
Stock and bond issuances often disturb investors, as the addition of new shares raises concerns about dilution and devalues existing holdings.
However, the rebound in stock price may be related to IREN's comprehensive restructuring of its balance sheet. The company stated it would use part of the proceeds from the equity fundraising to repurchase convertible bonds.
The company will also spend $174.8 million on capped call options to reduce dilution risk and enhance shareholder confidence in long-term stock prices.
CNBC market commentator Jim Cramer posted on the X platform on Wednesday that shareholders of any company taking on debt (like IREN) should sell.
"The magical investment year is back. Sell any company that is raising funds (like IREN) or has significant insider selling. Stay tuned here!" he stated.
However, X users quickly mentioned the concept of the "reverse Cramer" effect online, where any stock he criticizes tends to strengthen. Cramer's investment advice has become a meme, with many claiming it is often a misjudgment.
The stock price has fallen below its historical high of over $62 set in October.
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Original: “IREN Shares Recover After Announcing $3.6 Billion Debt and Equity Financing Plan”
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