Circle Internet Group (CRCL +1.54%), the issuer of the USD Coin (USDC +0.00%) stablecoin, went public last June at $31 per share. Its stock now trades at nearly $94. Could investing $10,000 in this hot fintech stock make you a millionaire over the next few decades?
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How does Circle make money?
Circle's USD Coin, a cryptocurrency pegged to the U.S. dollar, is used to settle cross-border transactions at faster and cheaper rates than conventional interbank transfers. It's also an easy way for people in countries grappling with hyperinflation, currency devaluation, and geopolitical conflicts to preserve their savings without buying actual U.S. dollars.
Like other stablecoins, USD Coin can be staked on centralized exchanges or decentralized finance protocols to earn yields higher than those of dollar-based savings accounts. But unlike many other stablecoins -- which hold other cryptocurrencies or opaque assets in their reserves to stay pegged to the U.S. dollar -- USD Coin is directly backed by cash and U.S. Treasuries held by regulated custodians. Circle is also the only company that can mint new USD Coins.
NYSE: CRCL
Key Data Points
Circle's centralized approach makes USD Coin less appealing to people seeking decentralized stablecoins shielded from government regulators. However, they're a perfect fit for companies like Visa (V 0.69%) and Intuit (INTU 0.11%), which both recently integrated USD Coin into their ecosystems to accelerate their financial transactions.
Most of Circle's revenue comes from its reserve interest income, or the interest it earns from the bank deposits and short-term Treasuries held in its own reserves. A smaller but growing percentage of its revenue comes from transaction fees, which it charges for routing payments through its blockchain, as well as subscription fees from businesses that tether their platforms to its ecosystem via APIs, wallets, and other applications.
Could Circle generate millionaire-making gains?
From 2025 to 2027, analysts expect Circle's revenue to increase at a 25% CAGR. They also expect it to turn profitable this year and grow EPS by 69% in 2027.
The growing demand for its stablecoins should support that robust growth. To meet that demand, Circle will increase its reserves to mint more USD Coins, thereby boosting its reserve interest income. Its other fees should also rise as it locks in more financial partners.
That growth trajectory sounds promising, but Circle's stock isn't cheap at 84 times this year's earnings. If it matches analysts' estimates through 2027, continues to grow its EPS at a 25% CAGR over the following nine years, and trades at a more sustainable (but still expensive) 50 times forward earnings, its stock could rise more than sixfold over the next decade. That's a solid long-term gain, but it probably won't turn a $10,000 investment into $1 million.
