Shares of Circle Internet Group (CRCL 0.89%), 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.
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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.
