Circle’s stock (CRCL) has seen a dramatic reversal, erasing nearly all of its gains from its initial public offering (IPO), currently reverting to its opening price despite reporting robust third-quarter earnings and significant growth in USDC circulation. The decline is attributed to mounting supply pressure, the expiration of lockup periods, and a changing landscape in the stablecoin market, even as major financial institutions express growing optimism about Circle’s long-term position.
Initially, Circle’s IPO in early June generated overwhelming interest, with reports suggesting it was oversubscribed by more than 25 times. However, the stock has since experienced a steep drop. MoonRock Capital’s founder, Simon Dedic, pointed out that CRCL has effectively “round-tripped” its entire post-IPO rally, noting macroeconomic concerns coupled with fears around price fluctuations have intensified investor anxiety. Special attention has been drawn to the expiration of lockup periods for early investors, which could lead to an influx of shares into the market, causing short-term volatility but also presenting potential buying opportunities.
Despite the stock’s decline, Circle’s underlying business has shown significant improvement. Reports highlighted a 108% increase year-over-year in USDC circulation, bringing the total to $74 billion. Additionally, revenue climbed 66% year-over-year to $740 million, surpassing expectations, while adjusted EBITDA rose by 78% to $166 million. Circle reported $9.6 trillion in on-chain transaction volume, marking a staggering 680% increase compared to the previous year.
Dedic reassured observers that fears of earnings compression are unfounded, attributing recent pessimism to price movements rather than the company’s financial health. He emphasized that concerns relating to an impending rate cut cycle are somewhat misaligned, suggesting that investors should focus on the long-term growth narrative rather than short-term price actions.
The stock’s decline has also been interpreted as a structural issue following its IPO surge from $31 to a near peak of $240, before pulling back once lockup restrictions expired. Analysts at Milk Road posited that CRCL remains overvalued and suggested recent earnings beats served as a “sell-the-news” moment, which added to downward pressure. After positive earnings reports, the stock still fell over 12% in a single day.
User discussions on social media have questioned valuations within the stablecoin market, drawing contrasts between Circle and Tether—valued at $500 billion compared to Circle’s $20 billion. Observers noted a substantial profitability disparity, with Tether generating far more net income.
Despite the fluctuations in stock price, institutional interest appears to be solidifying. Notably, JPMorgan upgraded Circle’s rating from “underweight” to “overweight,” raising its price target from $94 to $100. Analyst reports highlighted promising prospects due to potential partnerships, the increasing use of USDC on Circle’s platform, and the anticipated introduction of a future Arc token as avenues for monetization and growth. Even investment firms like Cathie Wood’s Ark Invest made notable purchases in CRCL shares.
As the stablecoin market dynamics evolve, Circle navigates immediate volatility from the release of insider shares while also being positioned as a key player in the crypto ecosystem. The upcoming weeks will be critical as to whether new supply can be absorbed by the market or if further adjustments in stock price will occur, particularly as the anticipated “stablecoin supercycle” approaches.
