Why it’s ‘difficult to predict’ how Circle’s NYSE listing plays out
Fineqia’s Matteo Greco says Circle’s targeting a valuation in line with market expectations to avoid a post-launch drop like Coinbase
Circle and Adobe stock modified by Blockworks
This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.
Stablecoin issuer Circle’s expected listing on the New York Stock Exchange tomorrow comes roughly four years after another crypto milestone: Coinbase’s public market debut.
I wrote yesterday about how the apparently solid institutional demand for Circle doesn’t necessarily spell out what will happen once CRCL shares list.
“It’s difficult to predict the precise impact of this listing,” said Fineqia senior associate Matteo Greco. “Back in 2021, there was widespread belief that Coinbase’s stock would soar following its Nasdaq debut. The outcome proved quite different.”
Coinbase’s valuation at the time of its direct listing in April 2021 was widely considered to exceed fair value, Greco told me. And the timing was “unfortunate.”
COIN shares opened at $381 but closed at $328 on day one, Yahoo data shows. Though BTC reached a new high in November 2021, that was the beginning of a bear market. Coinbase stock dipped below $50 at times in mid-2022.
Although the stock has recovered to around $260 today, early investors have effectively been underwater for four-plus years, Greco noted.
With stablecoin use cases gaining steam and proposed US legislation on the table, the timing for Circle’s listing appears strong. Still, forecasting how CRCL shares will move on the NYSE is challenging, Greco argued.
“The main factor will be its valuation relative to what market participants deem to be its fair value,” he said.
The $7.2 billion valuation Circle is targeting (given the Monday filing upsizing its IPO) is below the $7.7 billion valuation it got in an April 2022 funding round. The final IPO price is reportedly expected Wednesday evening.
Compass Point analyst Ed Engel pointed out that the $7.2 billion valuation implies a 14.3x multiple on annualized first quarter EBITDA; Coinbase and Robinhood trade at about 30x their estimated 2025 EBITDA.
VanEck’s Matthew Sigel told me yesterday that Circle can be considered a “‘boring is beautiful’ trade” given its profitability, minimal leverage and position within Web3 financial infrastructure. But retail investors “may find it harder to latch on” to a company with less volatility and brand recognition than Coinbase, he argued.
Circle’s USDC stablecoin holds a roughly 24% market share in the ~$250 billion stablecoin segment. It generates highly visible interest income that can scale alongside stablecoin adoption, Engel said.
But, he added: “We also expect near-term USDC supply to remain driven by DeFi and crypto trading volumes, which are historically correlated with crypto market cycles.”Check Blockworks.co for updates on Circle’s final IPO pricing and CRCL stock movements.
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
