Circle's Stock Doubles Post-IPO, Divides Wall Street

Circle Internet Group, the blockchain infrastructure company known for issuing USD Coin (USDC), a fully reserved, U.S. dollar-backed stablecoin, has sparked a divide among Wall Street analysts following its recent Initial Public Offering (IPO). The company debuted at $69 per share, marking the first major IPO by a stablecoin issuer and the largest crypto listing since the 2021 debut. The IPO was priced at $31 per share, and the company's shares have since more than doubled, reaching a high of $263 before correcting to around $180.

Several brokerages, including Barclays, Bernstein, Canaccord Genuity, and Needham, initiated coverage with 'buy' ratings and price targets above $200. These analysts are optimistic about the rapid global adoption of stablecoins and Circle's strategic positioning as a market leader in the digital dollar stablecoin network. They highlight Circle's strong regulatory edge, liquidity headstart, and marquee distribution partnerships as key factors contributing to its potential long-term success. The recent passage of the GENIUS Act, which establishes the first federal regulatory framework for stablecoins, further supports this optimistic outlook.

However, not all analysts share this bullish sentiment. J.P. Morgan and Goldman Sachs have expressed concerns about Circle's elevated valuation. J.P. Morgan initiated coverage with an 'underweight' rating and a price target of $80, implying a significant downside from the stock's last close. Similarly, Goldman Sachs started coverage with a 'neutral' rating and a price target of $83, citing the stock's rapid rise since the IPO as a reason for caution. Both firms acknowledge Circle's attractive business and growth prospects but believe the current valuation is too high.

The differing opinions among analysts reflect the broader debate surrounding the valuation of high-growth technology companies, particularly those in the cryptocurrency and blockchain sectors. While some analysts are bullish on the long-term potential of stablecoins and Circle's role in the traditional financial ecosystem, others are more cautious, citing the stock's rapid appreciation and elevated valuation as potential risks. As the market continues to evolve, it remains to be seen which perspective will ultimately prevail.

Circle’s successful IPO is catching the attention of Wall Street. On Monday, June 30, after the mandatory quiet period ended, major financial institutions began coverage of the stock. Firms including Barclays, Bernstein, and JPMorgan released their ratings and price targets. Barclays, Bernstein, Canaccord Genuity, and Needham all set Circle’s stock price target above $200, implying upside potential of around $15 per share from its current price. The bullish case centers on Circle’s potential to expand its stablecoin business and its competitive advantages.

“CRCL is building a market-leading digital dollar stablecoin network, with a strong regulatory edge, liquidity headstart and marquee distribution partnerships. This is hard to replicate, in our view,” Bernstein analysts.

Still, while most ratings are bullish, JPMorgan and Goldman Sachs offered more cautious perspectives. JPMorgan set a price target of $80—59% below the current trading price of $185. While the bank praised Circle’s business model, it flagged the valuation as excessive. “Circle and USDC have an early-mover advantage in what has been a winner-takes-most market, driving USDC market capitalization to $62 billion. We think highly of the Circle management team and are confident in the outlook for outsized stablecoin and USDC growth. However, we see Circle’s current market capitalization elevated,” Kenneth Worthington, JPMorgan analyst.

At the same time, the investment bank Goldman Sachs agreed with the sentiment. Analysts from Goldman Sachs started the coverage with a neutral rating and put the price target on the stock at $83. “Together, pending global stablecoin regulation that should favor adoption of compliant stablecoins like USDC, as well as continued new partnerships should drive continued market share gains,” James Yaro, Goldman Sachs, stated. “We view CRCL’s business and growth attractively, but valuation appears elevated,” he added.