Circle stock price may crash soon: here’s why

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Is Circle Stock About to Take a Nosedive? 🚀💥

Ah, the Circle stock price, that delightful little rollercoaster that decided to surge on Monday, sending its market capitalization soaring to a dizzying $27 billion. One can only imagine the confetti raining down in the boardroom, or perhaps it was just the sound of investors popping champagne corks. 🍾

CRCL, the stock that’s apparently been hitting the gym, jumped to a sprightly $138.27, a leap that would make even the most agile kangaroo envious. This impressive feat comes from the insatiable appetite of investors for a slice of the ever-expanding stablecoin pie, which, according to the crystal ball at Citi, is expected to balloon to a staggering $1.6 trillion by 2030. Yes, trillion with a ‘T’—because why not? 💰

Now, while Circle is basking in the glory of being the best-performing IPO of the year (cue the applause), there are two rather ominous clouds looming on the horizon that might just rain on this parade.

Valuation Concerns: The Party Pooper

First up, we have valuation concerns, the party pooper of the financial world. Circle’s stock price might just face a bit of a tumble due to its current market capitalization of $27 billion, which is about 45% of its total USD Coin (USDC) assets. That’s a bit like paying $27 for a sandwich that’s only half a sandwich. 🥪

In its latest earnings disclosure, Circle reported a revenue of $1.6 billion for 2024, up from $1.45 billion in 2023. Not too shabby, right? But wait! The net income was a mere $155 million, giving the stock a price-to-earnings ratio of 174.2. That’s like trying to justify the price of a diamond-encrusted toilet seat—well above industry norms, if you catch my drift.

While Circle might deserve a premium valuation for being the big cheese in the stablecoin market, there’s a lurking risk that earnings growth could slow down. This risk becomes as real as your neighbor’s cat if the Federal Reserve decides to start cutting interest rates later this year and into 2026, as the fortune tellers at Polymarket predict. 🐱‍👤

Circle’s core business, which earns revenue by investing its reserve assets in government bonds, might find itself in a bit of a pickle as those yields are likely to decline when the rate cuts begin. Talk about a double whammy!

Post IPO Momentum: The Fading Fireworks

Now, let’s talk about the second reason why Circle stock could be in for a bumpy ride: the potential loss of post-IPO momentum. This is a classic tale as old as time, or at least as old as the last few IPOs. 🎆

Take Coinbase, for instance. It opened at $380 on its IPO day, danced its way up to $430, and then plummeted to a record low of $30 in 2023. Ouch! Or Webull, which jumped from $10 to $80 post-IPO, only to crash down to $11. And let’s not forget Robinhood, which soared from $35 to $84, then nosedived to $6.74 in 2022. It’s like watching a soap opera, but with more spreadsheets.

This kind of performance is what happens when the post-IPO momentum fizzles out and investors start to cash in their chips. And just when you thought it couldn’t get any worse, there’s the looming fear of the December lock-up expiry, which will allow insiders to sell their stock. Historically, stocks tend to drop like a lead balloon as the lock-up period approaches. 🎈

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2025-06-09 19:19