Highlights;
- Circle’s stock fell 28.1% in August 2025 despite strong earnings.
- Revenue rose 53% to $658M, but a $482M net loss spooked investors.
- The loss was due to IPO-related costs, including stock-based compensation.
- Circle operates like a bank, earning 96.4% of revenue from interest on stablecoin reserves.
- The stock’s post-IPO surge and drop follow a common pattern.
- Investors are advised to avoid the stock until it stabilizes.
Circle’s stablecoin business is thriving, but investors fled in August. Here’s what caused the alarm.
In August 2025, shares of Circle Internet Group (CRCL) plummeted by 28.1%, according to data from S&P Global Market Intelligence. The company behind the USDC stablecoin released its first earnings report as a public company mid-month, but the results failed to justify the stock’s earlier surge.
Circle’s Earnings Fell Flat
From its June 4 IPO through July, Circle’s stock had skyrocketed by 492%. Investors were eager to see if the company could justify its $42 billion market cap. However, the earnings report didn’t meet expectations.
While Circle’s revenue jumped 53% year over year to $658 million, supported by USDC’s circulation nearly doubling to $61.3 billion, the company still posted a net loss of $482 million in the second quarter. This loss was largely attributable to IPO-related expenses, including costs tied to its skyrocketing stock price, which impacted the value of its convertible debt and stock-based compensation.
The Unexciting Truth Behind Circle’s Revenue Growth
It might seem odd that Circle generated $658 million in revenue despite USDC’s value remaining stable at $1 per coin. The secret lies in its banking-like business model: Circle earns interest on the dollar reserves backing USDC. In Q2, interest income accounted for 96.4% of its total revenue.
The Stock Price Drop: A Familiar IPO Pattern
It’s worth noting that Circle’s stock began sliding well before its earnings report. By September 2, its shares had fallen 54.4% from their June 23 peak. This sharp rise followed by a steep decline is a common trajectory for high-profile IPOs.
Only CoreWeave (CRWV) and Figma (FIG) have had more dramatic IPOs in 2025, and both followed similar patterns. Figma’s stock has dropped 46.2% from its post-IPO high in July, while CoreWeave saw a 359% gain before losing nearly half its value.
A Word of Caution for Investors
IPOs often follow a predictable cycle, and Circle’s story is no exception. Early investors in splashy debuts frequently face significant losses. While Circle’s stock might still be cooling off, it’s best to avoid this high-flying fintech stock until it stabilizes at a more realistic valuation.
Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
