Circle Internet Drops 6% in a Month: Buy, Sell or Hold the Stock?

Core Insights - Circle Internet Group (CRCL) shares have decreased by 5.7% over the past month, underperforming the Zacks Financial-Miscellaneous Services industry and Zacks Finance sector, which returned 5.2% and 1.4% respectively [1][4]. Company Overview - Circle offers USDC, a digital currency token redeemable on a one-for-one basis for US dollars, and EURC, both backed by reserves of highly liquid, price-stable cash and cash equivalents [2]. - As of March 28, 2025, Circle's stablecoin network has over 600 million users globally [3]. Market Position and Competition - Circle faces competition from established companies such as Coinbase, PayPal, and Fiserv. Coinbase has partnered with Shopify to enable USDC payments, while Fiserv is launching a blockchain-based digital asset platform with a U.S. dollar-pegged stablecoin [3][4]. - Circle's shares have underperformed compared to Coinbase and PayPal, which saw increases of 10.7% and declines of 5.1% and 17.5% respectively [4]. Financial Performance - Since its launch in 2018, USDC has facilitated over $25 trillion in onchain transactions, holding a 24% market share of stablecoins as of December 31, 2024 [7]. - Circle reported revenues of $1.7 billion, adjusted EBITDA of $285 million, and net income of $156 million for 2024, with total liquidity of $1.045 billion as of December 31, 2024 [9]. Sales Estimates - Zacks Consensus Estimates for Circle's sales are projected at $645.35 million for the current quarter and $2.57 billion for the current year, with estimates for the next year at $3.09 billion [11]. Product and Service Development - Circle Mint, serving institutional clients, is expected to benefit from the growing demand for stablecoins, with 1,819 customers as of December 31, 2024 [11]. - Circle Wallet has gained traction with over 11,000 developers and nearly 10 million wallets deployed onchain [12]. Strategic Initiatives - The acquisition of Hashnote and its yield-bearing token USYC is significant for Circle, as it plans to integrate USYC into its stablecoin network, offering yield to token holders [13][14]. Earnings Estimates - The Zacks Consensus Estimate for Circle's earnings for the second quarter of 2025 has increased by a penny to 29 cents per share, while the estimate for 2025 has decreased by 11 cents to $1.10 per share [15]. Regulatory Environment - The improving regulatory environment, highlighted by the passage of the GENIUS Act, provides a favorable legal framework for stablecoins like USDC, which is beneficial for Circle [8].