Circle Internet: Anticipating Stablecoin Market Growing 8x; Initiate With ‘Buy’

Summary Initiating Circle Internet with a ‘Buy’ rating and a fair value of $147 per share after a successful $1.05B IPO. Circle’s USDC and EURC stablecoins have strong market adoption, offering high liquidity, transparency, and regulatory compliance advantages over traditional finance. I project Circle’s revenue to grow 25% annually, driven by stablecoin market expansion, margin improvement, and operating leverage as expenses scale down. Key risks include competition from Tether, digital asset volatility, and evolving stablecoin regulations, but Circle remains well-positioned for long-term growth. Circle Internet ( CRCL ) launched its USDC, the stablecoin network in 2018, with nearly $6 trillion in on-chain transactions in 2025. The company’s stablecoins have gained market adoption among many payments and enterprise companies. I am initiating with a ‘Buy’ rating with a fair value of $147 per share. Circle Internet successfully raised $1.05 billion in recent IPO in June 2025. The company issues two payment stablecoins: USDC for US dollars and EURC for EURO currency. I think the Circle technology’s advantages can be summarized as follows: Stablecoins are highly liquid and can be redeemed for the underlying fiat currency. As such, these digital currencies could provide a crucial bridge between blockchain and traditional currency, as noted in its IPO prospectus . Unlike traditional finance, stablecoins can be easily transferred from one account to another, leading many payment companies to use stablecoins for daily transactions, remittances and trading purposes. USDC has gradually gained market adoptions over the past few years. As detailed in the table below, USDC is the second largest stablecoin by the total market cap. According to Circle Internet, its USDC processes around 29% of total market share. The management has prioritized the market adoption of USDC and EURC through heavy investments in platform innovations. Coin Market Cap Stablecoins are highly transparent and can satisfy the compliance and regulatory requirements, as these digital currencies are fully backed by currency reserves. Enterprises holding these stablecoins are less likely to encounter regulatory issues during accounting audits. In other words, CFOs are not risking their jobs to adopt stablecoins for their daily accounting activities. Lastly, Circle technology provides other liquidity services such as institutional minting, reserving, redemption and FX for its stablecoins. These additional services could enable institutional customers to fully leverage Circle technology’s platform and technology for implementing blockchain networks. I think Circle technology is still in the early stages of penetrating the huge market of cross-border payments, decentralized finance and e-commerce solutions. It is evident that stablecoins offer several advantages in terms of transparency, transaction fees and fast settlement. These benefits could position stablecoins for digital payments, cross-border transactions as well as other services such as e-commerce and merchant solutions, in my view. According to CoinDesk , the stablecoin market was equivalent to only 1% of US M2 money supply and 1% of total FX transactions in 2024, with potential growing to 10% of U.S. money supply and FX transactions. That means the overall market could potentially grow tenfold from the current size, which could lead to tremendous business growth for Circle technology. To be conservative, I assume stablecoin will reach 8% of money supply and FX transactions in a 10-year frame.timeframe. As such, I calculate the overall market will grow at a CAGR of 23%. I anticipate Circle technology will grow by 25% annually in revenue, slightly higher than the overall market growth driven by its scale and market share gains. It’s worth noting that Circle technology is a profitable business excluding some one-off costs, as detailed in the table below. They achieved a 9.7% of operating margin with $344 million in cash from operating activities. Circle Internet IPO Prospectus I forecast 200bps annual margin expansion, driven by 100bps from gross profits improvements, 50bps from lower marketing expenses and 50bps from operating leverage of total compensations. Circle technology has spent heavily on compensations, G&A and sales/marketing when they launched the USDC and EURC products. As the company scales, I forecast the overall expenses will gradually decline as a percentage of total revenue. I calculate the total operating costs will grow by 22% annually, leading to 200bps margin expansion. With these assumptions, DCF can be summarized as follows: Circle Internet DCF FCFF: Circle Internet DCF WACC = 11.4% assuming risk free 4.2%; beta 1.2; equity risk premium 6%; cost of debt 5%; equity $23 bn; debt $40 Mn; tax rate 20%. I set the terminal growth rate to be 5% aligned with the overall financial market growth. Discounting all the FCFF and adjusting net cash, the fair value is calculated to be $147 per share, as detailed below: Circle Internet DCF Key Risks While Circle technology has been growing rapidly, Tether remains the market leader in the stablecoin market, benefiti from first-mover advantages and a strong presence in emerging markets. As reported by the media, Tether considers to build its own U.S. payment network for stablecoins, creating a new payment token specifically for US market. Considering Tether’s size, Circle technology might face challenges in catching up with its rival. Circle technology held $31 million in digital assets on its balance sheet in FY24. The digital assets are highly volatile in terms of valuation; as such, their operational performance might be adversely affected if the price of its digital assets declines. For instance, the company incurred a $57 million loss in FY22 due to price fluctuations. Circle Internet IPO Prospectus Lastly, the stablecoin legislations are underway, as reported by the media. Specifically, the GENIUS Act and STABLE Act will implement regulations on stablecoin issuers, in terms of capital reserve, redemption, management, and safekeeping. In addition, the bill allows foreign issuers of stablecoins to issue in the US market, which could potentially increase the competitive landscape. Conclusion As the second largest player, Circle technology is well-positioned to benefit from the rapid adoption of stablecoins. I am initiating with a ‘Buy’ rating with a fair value of $147 per share.

Source: Seeking Alpha