Circle (CRCL), the company behind the USDC stablecoin, has seen its stock fall sharply since its strong debut on the Nasdaq earlier this year. After reaching a high of $298 on June 23, just 18 days after its launch, shares have dropped 68% to around $82.
As Circle nears the end of its lockup period—a time when insiders are restricted from selling shares—it faces historical headwinds. Although the company has benefited from a more favorable regulatory environment for digital assets under President Trump’s policies, past trends suggest challenges ahead.
Analyst Dan Dolev of Mizuho pointed out that the lockup period, typically lasting 180 days after an IPO, is set to end two days after Circle reports its third-quarter earnings this Friday. According to Mizuho’s study of over 750 IPOs with market caps over $1 billion, 58% of companies that outperformed the S&P 500 before their lockup period underperformed it in the following 180 days, with an average decline of about 2%.
The outlook is worse for companies that miss revenue expectations in the year after their IPO, which tend to underperform the S&P 500 by an average of 10%. Mizuho believes Circle could fall into this category. Much of Circle’s revenue comes from interest earned on USDC reserves held in short-term U.S. Treasuries, repurchase agreements, and cash. If interest rates fall or if USDC growth slows more than expected, revenue could suffer.
Dolev commented, “In our view, CRCL is likely to see downward revisions to consensus estimates over the coming years amid declining rates and less stellar proliferation of its USDC stablecoin, alongside growing distribution costs.”
Despite these concerns, Circle beat revenue and earnings estimates in its third-quarter report. Following the news, JP Morgan upgraded the stock from Underweight to Overweight and raised its price target from $94 to $100, citing the growing adoption of stablecoins like USDC by mainstream financial institutions.
However, JP Morgan analyst Kenneth Worthington noted that the approaching lockup expiration has already weighed on the stock. He sees the current dip as a “buy-low opportunity,” suggesting that the post-lockup decline may have pushed the stock below its projected value for December 2026, indicating potential for future gains.
Frequently Asked Questions
Of course Here is a list of FAQs about Circles stock plunge designed to be clear concise and helpful for investors at all levels
Beginner Definition Questions
1 What is Circle and what do they do
Circle is a financial technology company best known for USD Coin a stablecoin that is always worth one US dollar They help businesses make digital payments using blockchain technology
2 What is an IPO
An IPO or Initial Public Offering is when a private company sells its shares to the public for the first time on a stock exchange Its how a company goes public
3 What does it mean when a stock plunges or drops 70
It means the price of one share of the companys stock has fallen dramatically If you bought a share for 10 and it plunged 70 your share would now be worth only 3 This represents a massive loss of value for investors who bought at the higher price
Questions About the Specific Event
4 Why did Circles stock drop so much right after its IPO
The stock dropped because investor demand was much lower than expected Many people were wary of buying the stock due to concerns about the companys profitability the regulatory environment for crypto and the overall performance of recent IPOs
5 What specific alarm are analysts sounding
Analysts are warning that Circle may struggle to make a consistent profit They are concerned about intense competition the costs of running the business and whether there is a large enough market for its services to generate significant earnings
6 Did Circles stablecoin USDC also lose value
No USD Coin is a stablecoin which means its designed to maintain a steady value of 100 The stock plunge is about the value of the company that created USDC not the digital currency itself
Advanced InvestorFocused Questions
7 How does a companys direct listing differ from a traditional IPO and did that play a role
Circle went public via a direct listing where existing shares are sold directly to the public without the company raising new money or using banks to set an initial price This can sometimes lead to higher price volatility in the first days of trading as theres no underwriter