-
Why Circle Internet Stock Popped Today
Key Points
Shares of Circle Internet Group (NYSE: CRCL), the June IPO stock and issuer of USD- and Euro-denominated stablecoins, surged 7.1% through 9:50 a.m. ET after Circle reported its first financial results as a publicly traded company this morning.
Analysts forecast the company would report $644.7 million in revenue, but Circle beat expectations with a $658.1 million report -- and a $4.48-per-share loss.
Circle Internet Q2
Circle says the entirety of its loss came about from "IPO-related non-cash charges" of $591 million. But for those charges, the company's $482 million loss would have been something more like a $109 million profit. And on $658 million in total revenue -- up 53% year over year -- that would have been pretty impressive.
Circle says it plans to drive further growth through its "innovative platform" Circle Payments Network, which will permit financial institutions to use stablecoins for payments.
Is Circle stock a buy?
Circle chose some curious metrics to give investors by way of "guidance" for the rest of this year, predicting 40% "multi-year" growth in USDC stablecoins in circulation, saying it expects to generate between $75 million and $85 million in "other revenue" (without saying what revenue from its core operations will be), and introducing the concept of "revenue less distribution costs margin," which will range from 36% to 38%.
It also said "adjusted operating expenses" will run as high as $490 million this year.
I'm honestly not sure what all of this might translate into in terms of annual revenue, but it sounds pretty certain to me that Circle will lose money this year. This likelihood, combined with the newness of the IPO, tells me investors are probably safest staying away from this IPO for now.
Should you buy stock in Circle Internet Group right now?
Before you buy stock in Circle Internet Group, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Circle Internet Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $653,427! Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!
Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
This article has been published in www.fool.com via Yahoo News.
