Despite reporting better-than-expected third-quarter earnings, shares of stablecoin issuer Circle Internet Corp. (CRCL) plunged over 12% on November 12 as investors focused on rising costs and potential headwinds ahead.
The company raised its 2025 operating expense forecast to $495-$510 million from the previous $475-$490 million range, sparking concerns about future profitability. This guidance overshadowed strong Q3 results that saw revenue jump 66% year-over-year to $739.8 million, beating analyst estimates of $706.7 million. Earnings per share reached $0.64, far exceeding Wall Street's $0.20 projection.
Circle's growth was driven by the expansion of its USDC stablecoin, whose circulation doubled year-over-year to $73.7 billion as of September. However, investors appeared more concerned about: 1. Rising costs associated with planned initiatives like the Arc blockchain network (which has attracted partners including BlackRock, HSBC and Visa) 2. Potential compression of core revenue streams as the Federal Reserve's rate-cutting cycle continues (reserve yield already declined 96 basis points to 4.15% this quarter) 3. The possible early expiration of insider lock-up periods that could flood the market with shares
CFO Jeremy Fox-Geen attempted to counter rate concerns, stating: "Lower rates stimulate economic activity, risk-taking and investment - which benefits our business in the near term." Regulatory filings indicate insider lock-ups may end as soon as this Friday, two trading days after earnings release, rather than the typical 180-day period ending in early December.
The stock's decline extends its pullback to over 70% from its June 23 all-time high, reflecting growing investor skepticism about Circle's ability to maintain profitability amid rising costs and changing monetary conditions.
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