Stock price of CRCL dips to $154 post-market, despite Q2 revenue increasing by 53%
Circle's Secondary Stock Offering Leads to Sharp Decline in Stock Price
Circle, the US-based digital currency firm and issuer of the popular stablecoin USDC, has experienced a significant drop in its stock price following a secondary offering of 10 million shares. The offering, which took place in Q2 2025, included 2 million shares from the company and 8 million shares from existing stockholders, including CEO Jeremy Allaire who sold 357,812 shares worth $45.5 million.
The recent decline brings Circle's stock to $154, a 6% drop from Tuesday's close. This places the company's market value still substantially higher than its initial public valuation. Despite the drop, Circle's stock is up about five-fold from its IPO price of $31.
The secondary offering, which came soon after the company's IPO, is not unusual for high-growth companies whose shares have seen rapid appreciation. However, the large number of shares being sold by existing stockholders may raise questions about insiders' confidence in the company's near-term prospects.
Circle's Q2 2025 earnings report showed strong 53% revenue growth ($658 million) and a healthy adjusted EBITDA of $126 million, driven by 90% growth in USDC stablecoin circulation to $61.3 billion. However, a significant $482 million net loss, largely from non-cash IPO-related charges, may have misled investors about the company's operational health, sparking volatility and decline in the stock price.
The high price-to-sales multiple (16.46x) compared to the industry average (3.29x) also puts downward pressure on the stock amid any negative news or market uncertainties. Technical analysis identified a breakdown below key support levels with bearish patterns forecasting further declines toward $100 per share, intensifying selling pressure and causing the stock to drop over 55% from its June high of $300.
The stock decline coincided with a shift in market sentiment ahead of Federal Reserve Chair Jerome Powell’s Jackson Hole speech, as concerns about rising interest rates and diminished hopes of Fed rate cuts negatively affected crypto-related stocks including Circle. Additionally, fears over global regulatory risks add to investor caution.
Underwriters have a 30-day option to purchase an additional 1.5 million shares as part of the greenshoe option. The adoption of stablecoins by various use cases, including payments, remittances, and as a safe haven within the volatile crypto market, has benefited Circle. The secondary offering will provide additional liquidity for the stock while allowing early investors and company insiders to realize some of their gains.
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- The secondary offering of Circle, a US-based digital currency firm, has raised questions about insiders' confidence in the company's near-term prospects, as the sale of a large number of shares by existing stockholders may signal uncertainty, especially considering the rapid appreciation of the company's shares on the back of its popular stablecoin USDC and its role in the burgeoning cryptocurrency finance and technology landscape.
- Despite the recent sharp decline in Circle's stock price, the company's high price-to-sales multiple compared to the industry average, coupled with the growth of stablecoins as a safe haven within the cryptocurrency market, indicates a potential long-term investment opportunity for tech and finance-focused businesses seeking exposure to the fast-evolving world of digital currencies.
