Max
Huang
Valuing Circle After the IPO Quiet Period
Abstract profile. Full document pending author claim.
Authors:
Max Huang, Mark Egan
Date Created:
2025-01-01
Course Title:
Professor:
Not specified
About Paper:
The 2025 initial public offering (IPO) of shares in Circle Internetresearch reports, we analyze Circle’s revenue breakdown and Group, the world’s second-largest stablecoin cryptocurrency revenue-sharing partnerships to model future revenue streams issuer, produced one of the most remarkable “pops” in recent contingentonbase,bull,andbearcasesforvariousmacroeconomic stock market history, with stock prices growing over 200% in assumptions. By computing relevered asset betas from relevant the first two days and stabilizing at over 500% of initial offeringindustry comps, we calculate Circle’s levered beta and weighted price. Existing research on IPO pops and underwriting by large average cost of capital to derive an intrinsic valuation through investment banks suggests that Circle’s stock was strategically an unconventional discounted cash flow analysis. Preliminary underpriced at the time of the offering, but such rapid expansion results suggest a post-quiet-period “fair value” that aligns with of Circle’s market cap and trading multiples in a budding and the most conservative sell-side forecasts and is highly sensitive unpredictable stablecoin market makes determining a “fair” stock to interest rates and projected stablecoin adoption trends over the price difficult for even major banks. We believe Circle’s outlier nextfiveyears, providinganinteractivemodeltoillustratetoMBA valuation provides an opportunity to construct a highly debatable students how “hot” IPOs may cause tension between forward- MBA teaching case on IPO valuation in the context of innovative, lookingmarketvaluationandfundamentalvalue. Furtheriterations sentiment-driven emerging markets and regulatory uncertainty. of the model and case will follow as firm performance, market Utilizing Circle’s S-1 prospectus and leading sell-side equity conditions, and stablecoin regulation timelines develop.
Abstract:
The 2025 initial public offering (IPO) of shares in Circle Internetresearch reports, we analyze Circle’s revenue breakdown and Group, the world’s second-largest stablecoin cryptocurrency revenue-sharing partnerships to model future revenue streams issuer, produced one of the most remarkable “pops” in recent contingentonbase,bull,andbearcasesforvariousmacroeconomic stock market history, with stock prices growing over 200% in assumptions. By computing relevered asset betas from relevant the first two days and stabilizing at over 500% of initial offeringindustry comps, we calculate Circle’s levered beta and weighted price. Existing research on IPO pops and underwriting by large average cost of capital to derive an intrinsic valuation through investment banks suggests that Circle’s stock was strategically an unconventional discounted cash flow analysis. Preliminary underpriced at the time of the offering, but such rapid expansion results suggest a post-quiet-period “fair value” that aligns with of Circle’s market cap and trading multiples in a budding and the most conservative sell-side forecasts and is highly sensitive unpredictable stablecoin market makes determining a “fair” stock to interest rates and projected stablecoin adoption trends over the price difficult for even major banks. We believe Circle’s outlier nextfiveyears, providinganinteractivemodeltoillustratetoMBA valuation provides an opportunity to construct a highly debatable students how “hot” IPOs may cause tension between forward- MBA teaching case on IPO valuation in the context of innovative, lookingmarketvaluationandfundamentalvalue. Furtheriterations sentiment-driven emerging markets and regulatory uncertainty. of the model and case will follow as firm performance, market Utilizing Circle’s S-1 prospectus and leading sell-side equity conditions, and stablecoin regulation timelines develop.
Source:
Harvard / Howard University | Economics | 2027 / 2025
Topics:
circle, market, ipo, stablecoin, stock, revenue, price, valuation, initial, offering, model, pops
