Circle Shares Tumble 5% After Secondary Offering Sparks Dilution Fears

Circle Internet Group (CRCL) shares fell sharply following the announcement of a secondary stock offering, raising concerns about dilution and signaling early uncertainty for the company post-IPO. The stablecoin-focused firm launched the offering in mid-August, just two months after its initial public offering, which had initially driven the stock higher. However, the market quickly turned negative as insiders and existing shareholders planned to sell a total of 10 million shares—8 million from current stakeholders and 2 million from the company—triggering a more than 5% drop in after-hours trading and a further decline of over 6% in subsequent post-market sessions [3][4].

The offering, detailed in an S-1 registration with the U.S. Securities and Exchange Commission [2], led to a 3.9% drop in Wednesday morning trading, with shares continuing to trade below the IPO price [1]. Analysts pointed to the move as a potential sign of insider capitalization, given that the stock had surged over 400% following the IPO [1]. Some investors also interpreted the offering as a sign of internal pressure to cash out, despite the company’s strong revenue performance.

Circle reported Q2 revenue of $658 million, up 53% year-over-year, driven primarily by its reserve income from USDC, the firm’s dollar-backed stablecoin, which generated $634 million in revenue—up 50% from the prior year [1]. The value of USDC in circulation increased 90% to $61.3 billion in the second quarter and continued rising by 6.4% through early August [1]. The company’s Other Revenue segment, which includes blockchain services like the CPN platform, grew 252% to $24 million, and Circle aims for this segment to reach $75–85 million in the second half of 2025 through its new dollar-denominated blockchain, Arc [1].

Despite these gains, the stock offering created immediate skepticism. While the firm reported an adjusted EBITDA of $121 million, a 52% increase year-over-year, it also recorded a $482 million net loss in Q2, largely due to a $591 million charge related to the public offering [1]. CEO Jeremy Allaire remained optimistic about the firm’s growth trajectory and platform adoption, but the stock’s performance highlighted investor caution.

Circle remains confident in its long-term potential, forecasting a 40% compound annual growth rate in USDC circulation and continued expansion in the stablecoin and blockchain markets [1]. However, the immediate market response underscores the tension between short-term dilution concerns and long-term growth prospects. The offering has drawn attention to the challenges of balancing capital-raising needs with investor confidence in the early stages of a public market presence.

Sources:

[1] https://siliconangle.com/2025/08/12/circle-posts-strong-quarterly-growth-shares-drop-proposed-stock-sale/

[2] https://stocktwits.com/news-articles/markets/equity/why-circle-stock-is-sliding-premarket-today/chrCEziRdBF

[3] https://www.investors.com/news/circle-earnings-q2-2025-crcl-stock-stablecoin-usdc/

[4] https://www.proactiveinvestors.com/companies/news/1076598/circle-shares-drop-after-34-5bn-secondary-offering-plan-1076598.html