Circle Drops 30% in a Month: Should You Still Hold the CRCL Shares?

Core Insights - Circle Internet Group (CRCL) shares have declined 30.3% over the past month, underperforming the Zacks Financial-Miscellaneous Services industry, which fell 1.7%, and the broader Finance sector, which rose 1.3% [1][2] - The underperformance is attributed to increasing competition from Coinbase, PayPal, and Robinhood, with Coinbase recently partnering with Shopify to enable USDC payments [2][10] - Circle's USDC circulation grew 90% year over year, reaching $61.3 billion by the end of Q2 2025, and further increased to $65.2 billion by August 10, 2025 [10][11] Financial Performance - Circle's total revenues and reserve income increased by 53% year over year to $658.1 million, surpassing the Zacks Consensus Estimate by 1.97% [12] - Revenues less distribution costs (RLDC) rose 38% year over year to $251 million, although the RLDC margin contracted by 408 basis points to 38% [12] - The company expects the RLDC margin for 2025 to be between 36-38% [12] Product and Platform Expansion - Circle launched the Circle Payments Network in May, aimed at financial institutions for stablecoin payments, with over 100 institutions in the pipeline [13] - The Circle Gateway, introduced in July, facilitates cross-chain USDC usage and is supported by eight new blockchain partners [14] - Partnerships with major firms like Binance, Fireblocks, and Finastra enhance Circle's capabilities in cross-border payments and stablecoin integration [15][16] Market Position and Outlook - The improving regulatory environment, including the passage of the GENIUS Act, is favorable for stablecoins like USDC, promoting enterprise adoption [11] - The Zacks Consensus Estimate for Circle's earnings remains unchanged at 19 cents per share for Q3 2025, with revenues estimated at $668.7 million [18] - For 2025, the earnings estimate is $1.10 per share, with revenues projected at $2.58 billion [19] Investment Considerations - The current valuation of CRCL shares is considered stretched, and competition poses risks in the near term [21] - Circle's investments in platform development and partnerships are expected to increase operating expenses, projected between $475 million and $490 million for 2025, indicating a growth rate of 20-24% [21] - The company holds a Zacks Rank 3 (Hold), suggesting that investors should wait for a more favorable entry point [22]