⭕️ Circle up 675% since IPO - is it overvalued?

🚀 Circle ($CRCL) has been FLYING since its IPO on June 5 - soaring +675% over the last 2 weeks...

🤑 The company is the creator of the USDC stablecoin (the 2nd largest stablecoin in the world) and makes 95% of its revenue on the interest earned on the stablecoin.

💸 A lot of people (and analysts) are super bullish on the stock, saying the stablecoin market is just in its infancy (with even the US Treasury secretary Scott Bessett saying the $260B market could easily be worth $2T) - but here's why I think it's overvalued (even if you're super bullish on stablecoins)...

🤝 Circle has a 50% revenue share agreement with Coinbase ($COIN) for all interest revenue earned on USDC, but when we compare the valuations of the two company's, it doesn't really make a lot of sense:

- Coinbase has a market cap of $79B with $6.6B in revenue in 2024 (more than double the year before)

- Circle now has a market cap of $58B with $1.7B in revenue in 2024 (only 16% up from the year before)

🤔 This means if you if you value Coinbase’s Stablecoin revenues (from its revenue share with Circle) at the same multiple as Circle right now (at a 46x multiple on revenue), it implies that the rest of Coinbase’s business is only worth a 2.5x multiple on revenue (which is very low).

💡 It seems to me that if you want stablecoin exposure, Coinbase is a much better buy, but I'm curious to hear from the 300 Circle holders on Blossom if I'm missing something! Let me know in the comments 👇

🐝 For my full deep-dive on Circle I'll put the link to my 1,000+ word write-up in the Weekly Buzz in the comments!

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33 Comments

Maxwell

@maxstocks · 1yrEdited

🐝 Here's the link to my full breakdown in the Weekly Buzz! https://news.blossomsocial.ca/p/stablecoin-stock-circle-surges-675-since-ipo

👀 I also made a video about it on IG for anyone curious - https://www.instagram.com/reel/DLLlk8fxoD8/?igsh=MWhkZWVpMGg0bWI3bA==

Brett @birdmanbrett · 1yr

I sold the majority of my position at a 3x not getting greedy. Happy to book several thousand US profit.

Ronan

@ronan · 1yrEdited

The holders on blossom are likely gamblers who bought at IPO or soon after in hopes of it continually going up. Very likely almost all of the holders don’t even know what the company does

Unlikely the company will stay at current price, insanely overvalued and was only hyped up from the stablecoin bill (which has only passed in the senate not the house)

Chris M

@compoundchris · 1yr

I was super close to buying it during the IPO but ultimately decided not too because I dont like crypto and wanted to follow my morals.

The lesson here is scew morals and do what needs to be done for money 😅

Keegan Webster@keeganwebsterx · 1yr

I sold my position. Good luck to all that are still in it but the 2600 p/e is just asking for trouble.

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