Circle Is Down 70% Since June.Has the Stock hit bottom?

After soaring in the wake of its blockbuster initial public offering,Circle Internet Group

CRCL

-5.10%

stock has swiftly come back to Earth. That drop may not be over, analysts at Mizuho Securities argue.

Circle shares hit a record closing low of $82.34 on Thursday, dipping below the $83.23 finish on June 5, its IPO date. To be fair, the offering price that day was just $31, so investors who got in on the ground floor have profited handsomely.

Those who waited a few weeks? Not so much. Shares have plummeted roughly 68% from their record high on June 23.

The stock was up 1.7% to $83.67 in afternoon trading Friday.

Circle issues theUSDC

USDCUSD

0.00%

stablecoin, a type of cryptocurrency pegged to the U.S. dollar. While the company has benefited from a softening regulatory approach to digital assets, it doesnt have history on its side as an IPO at the end of its lockup period, Mizuho analyst Dan Dolev said in a research note Friday.

Lockup periods prevent insiders from selling shares, typically until 180 days after an IPO. In this case, Circle said in a June regulatory filing that the lockup period would expire two days after its third-quarter earnings, which would be this Friday.

Mizuhos historical analysis of more than 750 IPOs with a market capitalization of at least $1 billion shows that 58% of those that outperformed theSP 500

SPX

-0.06%

pre-lockup, as Circle did, underperformed the index in the 180 days post-lockup by an average of 2%.

The numbers are even worse for companies whose revenue falls short of expectations in the year following their IPOs. They have an average 180-day negative return of around 10% versus the SP 500.

Circle may fall into the latter category, Mizuho said. The company earns most of its money on interest from USDC reserves held in short-term U.S. Treasuries, Treasury repurchase agreements, and cash. That means falling interest rates or slower-than-expected USDC growth could weigh on revenue.

In our view, CRCL is likely to see downward revisions to consensus estimates over the coming years amid declining rates, less-stellar proliferation than many are hoping for of its USDC stablecoin, and growing costs to distribute the coin, Dolev wrote.

The firm reiterated an Underperform rating for the stock and lowered its price target to $70 from $84.

Those potential downward revisions havent materialized yet, it should be said. Circle surpassed consensus expectations for both revenue and earnings in itsthird-quarter earnings reporton Wednesday.

J.P. Morgandouble-upgraded the stockto Overweight from Underweight and boosted its price target to $100 from $94 following the news. The quarterly results indicate mainstream financial institutions are continuing to adopt stablecoins, with USDC a leading token, the bank said.

The lockup expiration has already been a drag on Circles stock in recent weeks, J.P. Morgan analyst Kenneth Worthington argued, presenting a buy-low opportunity for investors.

With the stock price falling on lockup expirations to levels below our Dec. 2026 price target, we see an opportunity for upside in the shares, Worthington wrote.