Disclosure: Not financial advice. Do your own research.

Only around 6 months ago now or so, the market was in full-swing IPO mode. Figma. Bullish. Chime. The list goes on. It was a deserved nonstop summer melt-up after Trump crashed the market with sweeping tariffs in April. Ever since then, the TACO trade - Trump Always Chickens Out - has been on. But a much larger force has entered the arena, and its affect has been felt exhaustively.

For the past decade and a half, really since the early 2000s, software has been eating the world. It’s allowed SAAS companies to proliferate and big-tech behemoths to engorge themselves, taking up an increasing share of the market. They were, for the longest time, the elephant in the room. That’s all changed in the past couple years. LLMs have gone from funny to a critical tool for productivity. The writings on the wall. AI is eating software.

Like with all sea changes, comes multiple re-ratings… big ones. Software names over just the past few months have wiped out effectively six years of gains. What this means, is stocks like Figma whose IPO was red-hot, are now down 82%. In the course of less than a year.

Jim Cramer always says, even in bear markets, “there’s a bull market somewhere”. Well Jim, it ain’t in software. And it definitely ain’t in crypto. If AI is eating software, it’s throwing crypto in the Mariana Trench. Or a fiery abyss, take your pick.

The question is, are there some undeserving companies that have been thrown in the pile? Is the baby thrown out with the bathwater?

Yes. Actually, almost certainly. And it’s simply because it’s too difficult to know. Nobody knows with certainty whether Adobe is going to be around in 15 years anymore. If you asked somebody 5 years ago, they would have thought Adobe would dominate for the next hundred years. Turns out, some moats aren’t as strong as others.

But this isn’t about Adobe. It’s about a company that has metrics you can track online, in real time, and see for yourself that the business is doing well. That, in fact, it has been thrown out with the bathwater.

This is a company that grew 66% in Q3 2025. Yet, since June, it’s down 80%. The average of 28 analyst price targets? 138% above the current share price.

Today, we’re going full Circle — CRCL 0.00%↑.

This is a stock that went from a $31 IPO price to $264, and now all the way back down to $55. But why? Is it AI? Well, no. It’s a bit more nuanced, and we’ll get to that, but first we need to build our own idea of where Circle came from. We need its story, its composition. Is management owner-operator-founders, or are they suits for hire?

Circle, believe it or not, is a payments company that goes all the way back to 2013. Founded by Jeremy Allaire and Sean Neville, Circle’s initial goal was to use Bitcoin as a backend for payments. Circle Pay was released in 2014 as a mobile payment product. Embedded in their product was their wallet service which in 2015 expanded support for Ethereum and allowed users to hold fiat currencies, outside just cryptocurrencies. By 2016, Circle partnered with Coinbase, opening the door to cash payments and transfers to US-based accounts.

In 2018, Circle raised $110 million to create a USD stablecoin on Ethereum under the “Centre Consortium” which included Coinbase and Bitmain as members. Shortly after, crypto winter started and in 2019 Sean Neville resigned, with the Circle Pay and web apps being discontinued. During the years that followed, Circle went through a whirlwind. Crypto winter lasted from 2019 to 2020. Then everything took off. Covid hit, everyone went online. Suddenly, crypto was all people focused on. The Biden Administration was in office, and eventually their completely unwarranted, hostile attitude fixated on crypto. People were debanked left and right, thrown into prison, and many fled the US.

In July 2021, Circle planned to go public in a $4.5 billion dollar deal. But by 2022, the deal was terminated. In 2023, USDC announced that $3.3 billion of it’s $40 billion reserves were held in Silicon Valley Bank, which collapsed. The next crypto winter happened in 2023, and Circle announced layoffs and paired down operations. They eventually received funding in exchange for an equity stake from Coinbase. With that cash cushion, they were able to weather the storm, and on May 27, 2025, Circle launched its IPO on the NYSE. They sought a valuation of up to $6.7 billion. Turned out that was a bit too modest because on the second day of trading, CRCL 0.00%↑ soared 247%, reaching a market cap of $28.6 billion. Circle was the hottest thing since sliced bread.

But only several months later, Circle trades at $55 a share, with a market cap below $13 billion. Jeremy laid an egg with this one. A real stinker.

And he knows it. In June, he sold $46 million worth of the stock pre-IPO. After going public, another $46 million worth. In fact, nothing but non-stop selling. Frankly, who can blame him? What if you were in his shoes. Going through multiple crypto winters. Grinding for almost 15 years building the business. Nearly getting debanked. Almost going bankrupt. Seeing $3.3 billion disappear overnight as a bank collapsed. Going toe to toe with Washington to lobby for the GENIUS Act and Clarity Bill. Wouldn’t you take your $100 million pay day and finally have a smile on your face?

Despite all that selling, the underlying business is solid. Really, more than solid. In Q3, 2025, Circle reported total revenue and reserve income of $740 million, which grew 66% year-over-year. USDC in circulation grew 108% year-over-year to $73.7 billion. And net income of $214 million at a 202% year-over-year growth rate. Insane.

Now, this was partially buoyed by a $61 million SBC benefit and another $48 convertible debt benefit, but still very impressive. For a stock that trades at $13 billion that’s impressive. But the important part is the 108% growth in USDC. That’s key. The total circulation of their stablecoins is what drives the underlying business. It’s Circle’s lifeblood. And how’s it doing? Great.

USDC is only very slightly down from it’s highs of around $78 Billion in Q3. And it’s very inline with the rest of the stablecoin market.

Over time, this is what matters.

Not the Trump Administration’s ephemeral policies.

Or legislation that will be adapted and amended over time.

Or the seemingly always pending crypto winter.

The total circulation of USDC. If Circle can keep growing just one number, that’s the one to focus on. If that grows, everything else will follow in its wake.

Right now, it’s like Mr. Market expects crypto to enter into another crypto winter for 2026. I mean, just look at Bitcoin — it’s fallen from $122k to now $72k. That’s a severe bear market in financial terms. And this is a $1.4 trillion dollar asset. What does that mean for stablecoins? Well in 2023, stablecoin circulation fell from $188 Billion to roughly $124 Billion. If that same pattern holds, the circulating stablecoins go from a high of $311 Billion to $205 Billion. That’d mean USDC supply drops to $51 billion.

Can that happen? Sure. In fact, the current situation with federal legislation, with the Clarity Bill losing support and banks lobbying for concentration limits on stablecoins as well as stricter limits on non banks, puts Circle in a tight spot. If banks are ably to lobby successfully, forcing crypto reserves into the G-SIB (Global Systematically Important Banks) framework, that could severely limit Circle’s business. End of story.

Now, Warsh — the soon to be Fed Chairman — is said to be a proponent of the CBDC. This fully upends USDC’s business. The likelihood of it happening is very low, but it could be playing into Mr. Market’s negative sentiment. More likely, though, is Circle is caught in the market’s apparent interpretation of Warsh as hawkish.

The point is, Circle has shifted from stablecoin, financial infrastructure play to a high-beta political narrative. And it’s not just about Circle, but about crypto, and Fed Reserve liquidity posturing.

But what price is Mr. Market offering to sell you his Circle? If you were to buy Circle — the entire business — today what are you getting? For $13 billion, you’re getting $2.4 billion in revenue TTM. Now in Q2 2025, Circle incurred an IPO related expense of $591 million and so that’s putting a damper on their bottom line, but if we look at Q3 with $80 million in operating income, that’s not all that bad. In fact, the company’s cash flows look pretty healthy. $400 million operating income TTM, $344 in 2024, and $139 in 2023.

Now, in 2021 and 2022 these were both negatives, so the company does not have a long history of positive, growing free cash flows. And at $13 billion you’re only getting $400 million in operating income. The market is telling you this is the best you’re gonna get. And often times the market is right. It’s like Stan says:

Contrarian investing is way overrated. It is intellectual cool to not be with the crowd but the crowd makes money 80% of the time.

Circle’s a really unique company. They’re got what seems to be a moat — as long as legislation permits — with margins that are starting to improve dramatically. With only around 1000 employees, they can gain operating leverage real quick. But is this a business like Palantir? The short answer is no. Does it have PayPal’s sentiment? Yes, but it’s not valued like PayPal.

Unless you’re using Circle as a proxy to bitcoin, and betting on a reversal, maybe this is a situation where you just listen to the market. If the stablecoin supply drops by 30-40% and Circle gets chopped in half, then it’s worth another look.

The future of stablecoins is bright, but for now Circle is a pass.