When it went public in June this year, Circle, with the label of "Stablecoin First Stock" and market enthusiasm for USDC's prospects, saw its stock price soar to a high of about $260, attracting market attention. However, just a few months later, as institutions and retail investors began to take profits, coupled with concerns about valuation rationality, intensified competition, and future interest rate trends, CRCL's stock price has significantly retreated, now hovering around $88.

This article will detail the multiple reasons for the stock price plunge, as well as Circle's possible future direction and market outlook, sorting out the underlying logic and potential opportunities and risks.

Circle's Heavyweight IPO

On June 5, Circle's stock opened at $69, far above the $31 issuance price, up about 124.19% from the IPO price. The market originally expected Circle's listing price range to be between $50 and $52, meaning it rose over 60% from the issuance price. Through this offering, Circle raised $1.1 billion. Driven by strong momentum, the company increased the issuance scale from the initially planned 24 million shares, ultimately issuing 34 million shares. On a fully diluted basis, Circle's valuation range was between $6.8 billion and $8 billion.

Circle's USDC is a USD-pegged stablecoin, with each token aiming to maintain a 1:1 value with the US dollar, backed by cash and short-term U.S. Treasury reserves. As the world's second-largest USD stablecoin, its circulating market value once exceeded $56 billion this year, with market share rebounding to about 25%, showing a trend of competing with USDT.

From High Valuation to Revaluation: Why Circle Couldn't Escape Deep Adjustment

Under the overlay of multiple factors, Circle's adjustment is not accidental but the result of the market repricing its business model and industry environment.

First, the excessively high initial premium was the direct cause of the decline. Circle was initially seen as the "Stablecoin First Stock" upon listing,叠加 high interest rate environment带来的可观储备收益, leading the market to give it a level far exceeding that of traditional fintech companies. As sentiment cooled, early capital took profits, and the stock price naturally corrected, reflecting investors' desire to return to a more rational valuation range.

Second, competition in the stablecoin market is intensifying rapidly. Although USDC is the world's second-largest USD stablecoin, its market share faces pressure from new stablecoin projects and traditional financial institutions' digital dollar plans. Some analysis institutions believe the stablecoin field has moved from an "oligopoly" to a "full competition" stage, and this structural change makes investors more cautious about USDC's future growth certainty.

Again, macro interest rate trends pose potential risks to Circle's profit model. Circle's core revenue comes from interest income on cash and short-term U.S. debt supporting USDC reserves. If market expectations for rate cuts warm up and U.S. debt yields fall, it will directly compress Circle's profitability. As more institutions begin to bet on the Fed cutting rates in the next two years, this concern is gradually reflected in the stock price.

Additionally, rising operating costs have weakened market confidence. Although the company revealed in its financial report that USDC circulation and revenue maintained strong growth, operating expenses, salary costs, and strategic investments continued to expand. For investors,单纯 revenue growth is insufficient to offset concerns about profit end pressure.

Rosenblatt Sees a Fall, Morgan Stanley Sees a Rise: Circle Enters the "Expectation Game Period"

Regarding Circle's subsequent stock price trend, Rosenblatt Securities analyst Dan Dolev gave a relatively pessimistic judgment in a research report released last week. He pointed out that based on the historical patterns of large IPOs, Circle's current decline may not have bottomed out.

The report mentioned that the IPO lock-up period usually lifts about 180 days after listing, during which insiders cannot sell shares. According to regulatory documents submitted by Circle in June this year, the company's lock-up period will officially end two days after the release of the third-quarter financial report, i.e., November 15. As this key node approaches, the market often提前消化 potential selling pressure risks.

After studying over 750 IPO samples with a market value of no less than $1 billion, Rosenblatt found that 58% of companies that outperformed the S&P 500 index before the lock-up period would significantly underperform the大盘 in the 180 days after the lock-up, lagging by an average of 2%. Those companies whose first full fiscal year revenue after listing fell short of expectations performed even weaker, with an average return rate about 10% lower than the S&P 500 over 180 days.

Rosenblatt believes Circle is likely to fall into this category. The logic is that Circle's main revenue currently comes from short-term U.S. debt corresponding to USDC reserves, repurchase agreements, and cash interest. If the Fed enters a rate-cut cycle in the future, falling interest rates will directly compress收益. At the same time, if USDC growth falls short of market expectations or distribution channel costs continue to rise, the company's revenue end will face dual pressure.

Dolev stated: "In our view, as interest rates fall, USDC expansion falls short of expectations, and distribution costs continue to rise, the market's consistent expectations for CRCL in the coming years will likely be forced down." Based on this, Rosenblatt maintains an "Underperform" rating on Circle and lowered the target price from $84 to $70.

However, it is worth noting that these concerns have not yet been reflected in the fundamentals. Circle's recently announced third-quarter financial report showed that both revenue and profit exceeded expectations.

After the financial report was released, Morgan Stanley immediately upgraded Circle's rating by two notches, from "Underweight" to "Overweight," and raised the target price from $94 to $100. Morgan Stanley believes that stablecoins are being adopted by more mainstream financial institutions, and USDC, as one of the leading players, still has improving penetration rates.

Morgan Stanley analyst Kenneth Worthington pointed out that the selling pressure brought by the approaching lock-up period has significantly压低 Circle's stock price in the past few weeks,反而可能 provide investors with a "buy low" window.

Worthington stated: "As the stock price fell due to lock-up disturbances to below our valuation level for the end of 2026, we believe the current point has some upside space."

Related recommendation: Circle launches privacy-focused stablecoin project USDCx