Circle's Stock Drops 4.8% After $1.63 Billion Share Sale Announcement

Circle Internet Group, a leading issuer of the second-largest stablecoin globally, announced plans to sell a total of 10 million shares. The company will issue 2 million shares, while its shareholders, including co-founder and CEO Jeremy Allaire, will sell 8 million shares. This announcement followed a significant surge in the company's stock price, which subsequently declined.

The U.S. Securities and Exchange Commission (SEC) filed documents on Tuesday revealing the details of the stock sale. At the closing price of $163.21 per share on Tuesday, this sale is expected to raise approximately $1.63 billion. As of the latest reports, the stock had fallen by 4.8%, trading at $155.40 per share.

The pricing for this offering is set to be determined on Thursday evening. Circle's representatives did not immediately respond to requests for comment. The filing indicates that the stock offering is being underwritten by major financial institutions.

Circle went public in June through an initial public offering (IPO), raising $1.2 billion. Since the enactment of the stablecoin-related legislation, the company's stock has surged by over 426% as of Tuesday's close.

Prior to the market open on Tuesday, Circle released its second-quarter financial report. Despite posting a loss in the second quarter, just two months after its highly anticipated public listing, Circle's revenue exceeded expectations. The company reported a net loss of $482 million, or $4.48 per share, primarily due to significant non-cash expenses related to the IPO. In the same period last year, the company reported a net profit of approximately $32 million. Revenue grew by 53% to $658 million, surpassing analysts' average estimate.

Following the release of the financial report, Circle's stock surged by over 10% in pre-market trading, opening at a high of nearly $190 per share, marking a 16% increase from the previous close. However, the stock price turned downwards after the announcement of the share sale, reflecting investor concerns over the dilution of shares.

Stablecoins are evolving from their initial role as a means of raising capital in the cryptocurrency market to becoming a universal medium of exchange, offering merchants and consumers a more cost-effective and efficient payment system. Circle's USDC stablecoin currently has approximately $65 billion in circulation, making it the second-largest stablecoin issuer after Tether Holdings SA, which has a market capitalization of around $165 billion for its USDT stablecoin.