Following a notable debut on the Nasdaq earlier this year, Circle (CRCL), the issuer of the USDC stablecoin, has experienced a significant decline in its stock value. After hitting a peak of $298 on June 23, just 18 days post-launch, shares have now dropped by 68%, trading around $82.
Despite benefiting from a softer regulatory stance on digital assets in the US with President Trump’s crypto policies, Circle faces challenges that history does not favor, particularly as it approaches the end of its lockup period.
Circle’s initial public offering (IPO) filing indicated that this lockup period is set to expire two days after the company unveils its third-quarter earnings, which is this Friday.
The outlook is even bleaker for firms falling short of revenue expectations in the year after their IPOs, which tend to experience an average negative return of about 10% relative to the S&P 500.
Consequently, a decline in interest rates or slower-than-anticipated growth of USDC could adversely impact revenue streams. Dolev noted:
In our view, CRCL is likely to see downward revisions to consensus estimates over the coming years amid declining rates and less stellar proliferation of its USDC stablecoin, alongside growing distribution costs.
Despite these potential downward adjustments, Circle recently exceeded consensus estimates for both revenue and earnings in its third-quarter report.
However, the impending lockup expiration has already placed downward pressure on Circle’s stock, according to JP Morgan analyst Kenneth Worthington.
Featured image from DALL-E, chart from TradingView.com
