Stablecoin Giant Circle Explodes 300% Higher In Its IPO
We warned you stablecoins were more exciting than they sound
After pulling out of prior attempts to go public, USDC stablecoin issuer Circle has finally hit the big board. And judging by its opening, demand was through the roof.
Circle saw shares price well above its initial range at $31 and once trading began on the New York Stock Exchange under the ticker CRCL, shares opened at $69, more than doubling out of the gate. At one point in Day 2 they even traded as high as $120 — a jaw-dropping 300% surge from the IPO price.
So yeah. Things went well. But is this as good as it gets? It’s now trading at about 125x trailing 12-month earnings — which is far higher than META (25x) or AAPL (31x.)
So there are more than a few reasons to be cautious about Circle’s path forward. Especially if you're thinking about buying in now.
👀 Watch our episode on Circle to catch up ⬇️
Let’s start with what Circle is: Less than one half of the global stablecoin duopoly. Tether controls about 60% of the market, while Circle's USDC hovers around 25%. Despite years of growth and a major partnership with Coinbase, USDC hasn’t gained meaningful ground against Tether in recent years.
Part of the problem? There’s no real moat when it comes to issuing digital dollars. New stablecoins are entering the market every day — including one tied to Donald Trump’s campaign. His USD1 stablecoin launched with Binance is already threatening to eat into USDC's mindshare.
And while USDC has earned its spot through slow and steady adoption, that has come at a cost.
Circle's latest S-1 filing reveals just how expensive it is to be Coinbase’s best friend. Distribution and transaction costs surged 68.2% year-over-year in Q1, outpacing revenue growth. That’s largely due to the structure of the partnership, in which Circle pays Coinbase a hefty slice of its earnings to get USDC in the hands of users and supported across major venues.
If interest rates come back down this year, Circle will also make less in revenue off of parking the assets that back its USDC stablecoin. Investors buying in now after a 4x are betting Circle can find big ways aside from Coinbase to find new holders. That could be additional adoption by institutions — but with big banks and tech companies gearing up to launch stablecoins of their own, Circle might have a tough road ahead after the post-IPO luster wears off.
What Else?
Uber CEO Dara Khosrowshahi wasted no time in saying the transportation giant is looking into ways to use stablecoins (after being asked about them on a panel.) That’s particularly interesting because Circle’s CEO Jeremy Allaire once RT’d my idea that Uber should be letting drivers earn in USDC so they can more easily send money home (for those often either having to wait, or pay hefty fees for remittances.)
If Circle either gears up to sell tech companies on “stablecoins as a service” that could justify the new public price — or, perhaps Circle could come around to sharing the love and announce a dividend. That would be more in the crypto ethos, and help invcentivize a nice flywheel effect that currently doesn’t exist. As I lamented today, USDC currently give users no upside in driving adoption. (RIP Terra.)
