Circle's 9% Plunge: The Smart Money Is Selling While Analysts Cut

Circle's stock fell 9.67% on Thursday, a sharp move that followed a quarterly earnings report that beat expectations. The company posted earnings per share of $0.64, crushing the consensus estimate of $0.20, while revenue surged 65.9% year-over-year. On paper, it was a strong performance. Yet the market's reaction was a classic "sell the news" event, where the positive fundamentals were completely overshadowed by conflicting signals from smarter money.

The sell-off was driven by conviction, not panic. Roughly 6.9 million shares traded during the session, a volume that was actually about 14% below the stock's average daily level. This suggests informed selling, not a broad-based flight. The catalysts were clear: heavy insider selling and aggressive analyst downgrades. Over the past 90 days, company insiders sold shares worth about $58.5 million, including recent transactions by CEO Jeremy Allaire. At the same time, research firms slashed their price targets. Deutsche Bank cut its target to $90 from $147, while Robert W. Baird followed with a reduction to $110 from $144. Wolfe Research initiated coverage with an underperform rating and a $60 price target.

The bottom line is a lack of alignment. The earnings beat provided a solid operational snapshot, but the actions of those who know the company best-its executives and top analysts-sent a different message. When the smart money is selling and the price targets are being cut, the stock's decline is a signal that the good news was already priced in, and the risks now outweigh the growth story.

The Smart Money Signal: Insiders Are Selling

The most telling signal isn't in the earnings report. It's in the filings from those who know the company best. Over the past 90 days, company insiders have sold shares worth about $58.5 million. This isn't a trickle; it's a steady stream of cash flowing out of the company, directly contradicting the bullish institutional narrative.

The CEO's move is the clearest red flag. On December 22, Jeremy Allaire sold 7,055 shares at a weighted average price of $90.07. That price was near the stock's recent high, a classic moment to take money off the table. For a CEO, selling at a peak while the stock is still rallying is a powerful signal of skin in the game. It suggests he sees limited upside ahead or wants to lock in gains before potential volatility.

This insider selling creates a stark misalignment of interest. While some institutions may be accumulating, the people running the company are not. When the smart money is selling, it's a warning that the good news may already be priced in, and the risks are now coming into focus.

Institutional Accumulation vs. Retail Sentiment

The institutional picture looks bullish on paper. In the last quarter, 460 funds increased their holdings, with the total share count owned by institutions jumping 18.82%. This is classic whale wallet accumulation, suggesting smart money is building positions. Yet, this data tells only half the story. The average price target of $154.77 implies the market is pricing in massive future growth from a company that is still posting losses, with a projected annual non-GAAP EPS of negative $0.27. That's a bet on a distant, flawless execution.

Options traders are also leaning bullish, with a put/call ratio of 0.63 indicating more call buying than puts. But this often lags behind real money flows and can be driven by retail sentiment or speculative positioning. The real signal comes from the actions of those with the deepest skin in the game.

Compare that institutional accumulation to the visible selling from the company's own executives. While funds are buying, the CEO and other insiders are cashing out. This creates a clear tension: the smart money outside the company sees opportunity, while the smart money inside is taking profits. The heavy insider selling suggests the institutional accumulation data may be overlooking near-term risks or overestimating the growth runway. When the people running the company aren't betting their own money, it's a cautionary note against following the crowd.

Catalysts and Risks: What to Watch

The current setup is a classic tug-of-war between institutional accumulation and insider profit-taking. The next few weeks will show which side wins. The immediate catalyst is the next earnings report, where the market will scrutinize two things: margin stability and signs of sustained institutional adoption. The company's growth is impressive, but the path to consistent profitability remains narrow. Any stumble in margins or a slowdown in the adoption of its payments infrastructure could quickly unravel the bullish thesis.

The most critical watch item is further insider selling filings. The CEO's recent sale from his personal holdings is a clear signal, but the real story is in the family trusts. Jeremy Allaire controls over 15 million Class B shares, each convertible to Class A. If those trusts begin selling, it would represent a massive, liquid block of stock hitting the market. That's the kind of move that can break a fragile sentiment. For now, the filings show only personal sales, but the potential for a larger exit remains.

The primary risk is a continuation of the "pump and dump" pattern. The stock rallied on the earnings beat, only to sell off sharply on insider selling and analyst downgrades. If future results fail to outpace this selling, the cycle could repeat. Institutional accumulation may be building a floor, but it's not a guarantee of support. The smart money outside the company is betting on the long term, while the smart money inside is taking profits now. When those two groups diverge this sharply, the stock's volatility is likely to persist.