Analyst Lowers Rating on Most Subscribed Crypto IPO as Shares Decline

Circle's IPO Success: Circle Internet Group went public on June 5, achieving the most oversubscribed crypto IPO in decades, with its stock surging 250% in the first two days, the largest two-day IPO increase since 1980, driven by strong institutional demand and optimism around stablecoin regulation.

Analyst Downgrades and Stock Performance: Despite its strong debut, Wolfe Research downgraded Circle to "sell," citing headwinds that have led to a 21.18% drop in stock price over the past six months, with a target price of $60 indicating a potential 33% downside from recent trading levels.

Revenue Sensitivity to Interest Rates: Circle's revenue, primarily derived from interest income on reserves backing its stablecoins, is highly sensitive to interest rate changes, raising concerns as the Federal Reserve is expected to cut rates, which could impact profitability.

Concerns from Earnings Report: Circle's third-quarter earnings exceeded expectations, but analysts warned of rising costs and weaker revenue trends, with Mizuho maintaining a 'sell' rating and a price target of $70, reflecting ongoing concerns about the company's financial outlook.