Circle CFO Jeremy Fox-Geen addressed these concerns in an interview with Yahoo Finance. He said the company is positioned well for a lower-rate environment.
Ark Invest purchased $30.5 million worth of Circle shares on Wednesday as the stablecoin company’s stock dropped following its third-quarter earnings report. The investment firm bought 353,328 shares across three exchange-traded funds.
The ARK Innovation ETF bought 245,830 Circle shares. The ARK Next Generation Internet ETF added 70,613 shares while the ARK Fintech Innovation ETF purchased 36,885 shares.
Circle’s stock fell 12.2% on Wednesday to close at $86.30. The drop came despite the company reporting strong quarterly results.
The stablecoin issuer reported $740 million in total revenue for the third quarter. This represented a 66% increase compared to the same period last year.
Circle’s net income surged 202% to $214 million. The company processed $9.6 trillion in on-chain volume during the quarter.
USDC circulation reached $73.7 billion at the end of September. This marked a 108% increase from a year earlier.
Circle now holds 29% of the global stablecoin market. CEO Jeremy Allaire said the company made “huge progress” with platforms for startups and financial firms.
Operating expenses rose 70% to $211 million. This increase reflected higher headcount and stock-based compensation costs.
Adjusted operating expenses increased by 35%. Allaire credited growth to commercial partnerships and cross-industry collaboration.
The stock decline reflected investor concerns about Circle’s revenue sources. Most of the company’s income comes from interest paid on assets backing USDC.
These assets include short-term Treasury bills. Investors worry this income could face pressure from Federal Reserve rate cuts expected next year.
According to Knockoutstocks, 22 Wall Street analysts rate Circle Internet as a “Hold” with 4 sells, 10 holds and 8 buys.
“We’re already in a rate-cutting cycle, and through that cycle we are delivering sustained growth,” Fox-Geen stated. He argued falling rates could benefit the business in the near term.
Investment bank William Blair gave Circle an “outperform” rating. Analysts encouraged investors to build positions while the stock trades lower.
“We see Circle as a clear leader in a winner-take-most market,” the analysts wrote. They cited Circle’s payment network and Arc blockchain as critical infrastructure.
The analysts also outlined risks including regulatory uncertainty and competition. They mentioned concerns about stablecoin infrastructure and lower interest rate pressure.
Circle announced it is exploring a native token for its Arc blockchain. The company launched the Arc public testnet last month for its Layer 1 stablecoin-centric chain.
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