Circle Stock Has Rallied Hard, But This Analyst Says It’s Now Time to ‘Sell’

Circle Internet Group (CRCL), parent of stablecoin USDC, saw its shares skyrocket following its initial public offering. From a debut price of $31, shares have surged more than 500% to just below $190 apiece. At their peak in June, they were briefly trading for almost $290 each. 

The remarkable spike in the stock has become a significant point of interest for retail and institutional investors looking to place a bet stablecoins and the future of digital payments. 

However, the euphoria is running up against pushback from Wall Street. JPMorgan, which backed Circle during its IPO, recently downgraded the stock to an “Underperform” rating based on a stretched valuation that is “pushed beyond our comfort zone.” The stablecoin issuer now trades at a market capitalization of around $39 billion, a fat valuation that implies meteoric growth but raises the downside risk sharply should the momentum fade.

About Circle Internet Group Stock

Circle Internet Group (CRCL) is a leading fintech company that is arguably most known for the issuance of USDC, the second-largest dollar-pegged stablecoin. 

CRCL shares have been very volatile since their IPO, ranging from a low of $64 to a high at $298.99 in its short trading history. 

Valuation multiples for Circle are a reflection of its growth premium and the buzz surrounding digital assets. Its price-earnings ratio is a mind-boggling 175.03x, and its price-sales ratio is a lofty 20.96x, in both instances much higher than the fintech averages. Its current valuation suggests that investors are predicting huge future growth that may be threatened should sentiment take a turn for the worse. 

What Do Analysts Expect for Circle Stock?

Circle stock earns a “Moderate Buy” consensus rating and the current mean price target is at $194.30, indicating relatively modest upside potential of 4%. However, the spread for price targets is otherwise very wide, with the high estimate at $250.00 indicating optimism about Circle’s growth runway, and a low estimate at $80.00 indicating concern about valuation risk and regulatory challenges. 

In particular, JPMorgan analyst Kenneth Worthington most recently rated Circle an “Underperform” with a caution that its shares have been “taken beyond our comfort zone.” If more analysts follow suit, the downgrades could elicit profit-taking among holders who netted early gains.