Circle: IPO Boomed, But Doesn't Match Valuation

Multiplo Invest
1.54K Followers

Summary

  • Circle's USDC stablecoin is uniquely positioned, gaining traction with major partners like Shopify, Walmart, and Amazon for payments and loyalty programs.
  • The company’s revenue model is robust, earning nearly all income from interest on USDC reserves invested in short-term U.S. Treasuries.
  • Regulatory clarity from the Genius Act boosts Circle’s credibility and growth prospects, mandating strict reserve and audit requirements for stablecoins.
  • Despite all this, valuation does not provide a margin of safety for investment.

The concept of using stablecoins in the financial system

Investment Thesis

I recommend selling Circle (NYSE:CRCL) shares. The company's stock has performed incredibly well since its IPO on June 5, and despite its extremely interesting and disruptive business model, I have doubts about the attractiveness of the investment.

Even

This article was written by

1.54K Followers
More than 5 years of experience in equity analysis in LatAm. We provide our clients with in-depth research and insights to help them make informed investment decisions.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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