Is Iris Energy Ltd. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Iris Energy Ltd. has moved from attractive to fair, indicating a shift in its perceived value. The company appears to be overvalued given its significant losses, as reflected in its P/E ratio, which is not applicable due to its loss-making status, and a Price to Book Value of 1.65. Additionally, the EV to EBITDA ratio stands at 17.16, suggesting a high valuation relative to earnings before interest, taxes, depreciation, and amortization. In comparison to peers, Iris Energy's EV to EBITDA is substantially worse than CleanSpark, Inc., which has a ratio of 13.21, and TeraWulf, Inc., which shows a negative ratio of -79.92.
Despite the overvaluation, Iris Energy has delivered impressive returns, with a year-to-date return of 518.33% compared to the S&P 500's 13.30%, and a one-year return of 578.44% against the S&P 500's 14.08%. This stark contrast in performance may indicate speculative interest rather than fundamental strength, reinforcing the notion that the stock is overvalued.