Cathie Wood Is Buying the Dip in Circle Stock. Should You?
Buying the dip is always an investor preference tactic used to seek significant returns, and not many investors implement it as aggressively as Cathie Wood does. As usual, ARK Invest (ARKK), led by Wood, pounced on Circle’s (CRCL) recent slumps, and she believes it presents a long-term opportunity rather than a short-term loss.
Circle’s recent performance has sparked a new controversy on Wall Street over the company’s reliance on income from reserves, though it is obvious that Wood is not bothered by this. Her team assertively contributed to their role, which means they firmly believe in Circle’s role as the middle of the stablecoin adoption process and the overall digital payment shift.
The decision has investors with their fingers crossed: Is Wood pinpointing another early-stage winner or going too far into a story at once? Let’s find out.
Based in New York, Circle Internet Group is a fintech issuing USD Coin, the world’s second-largest stablecoin. It makes money from the interest on reserves backing USDC and fees from its payments and blockchain products. The company launched in 2013 and went public in June 2025 and offers services for digital payments and crypto finance. The company’s CEO is Jeremy Allaire, who touts Circle’s mission as building “the new Economic OS for the internet.”
Circle’s stock has had a wild ride. After the June 2025 IPO at $31, CRCL surged; it “tripled from the $31 IPO price on day one,” hitting a record near $300 in mid-October. By year-end, however, those gains have mostly been given back, and CRCL now trades below $85, down roughly 77% from its peak. The stock’s selloff was exacerbated by a $740 million revenue beat that still anticipated a Q4 slowdown. In other words, early 2025 saw a rocket launch into the stratosphere, but recent months have felt like a controlled descent.
Despite the recent correction, Circle still trades at a steep premium. Its forward revenue multiple is 9x, well above peers near 3x. P/S is roughly 9x, and EV/S is about 7.6x. Analysts say valuation looks stretched until higher-margin revenue grows.
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On Nov. 12, Circle reported its Q3 earnings, which came in ahead of expectations, yet the stock tumbled as management signaled a more cautious outlook. The company delivered strong top-line momentum, powered largely by surging demand for USDC. Total revenue climbed 66% year-over-year (YoY) to $740 million, with reserve income contributing roughly $711 million of that total. Payments and subscription revenue, previously minimal, grew to $29 million, showing early traction in Circle’s diversification efforts.
Bottom-line performance was equally solid. Net income rose more than threefold to $214 million, and adjusted EBITDA increased 78% to $166 million. Circle reported about $0.64 in GAAP earnings per share, well above consensus, with adjusted EPS landing near $0.36.
The balance sheet remains a bright spot. Circle ended the quarter with $1.35 billion in cash, up from $1.12 billion in Q2. Over the past year, the company generated about $379 million in free cash flow, reflecting modest capex and strong operating efficiency for a fast-growing fintech.
CEO Jeremy Allaire framed the quarter as another step toward Circle’s long-term vision. “Circle continued to see accelerating adoption of USDC and our platform in the third quarter as we build the new Economic OS for the internet,” he said
Guidance was more measured. Circle raised its full-year outlook for non-interest revenue to $90 to $100 million and said it expects USDC circulation to continue growing at a healthy pace of more than 40% annually.
At the same time, the company warned that falling U.S. interest rates could pressure its core reserve income. Management also projected lower margins in Q4 as distribution costs rise and lifted its full-year operating expense forecast to between $495 million and $510 million to support continued expansion.
Besides the dip in earnings, there has been a load of stuff to land upon the tape. In late October, Circle introduced the Arc public testnet, a new layer-1 blockchain payments and FX testnet that already has more than 100 companies on board. They are also getting deeper into the partnerships. In late Q3, the company announced that major players such as Visa (V), Kraken, Deutsche Börse, and Brex were joining its ecosystem. That is all an indication that USDC is entering the financial infrastructure.
On the other hand, there are risks, as lamented by policy watchers. The U.S. passing the bipartisan Genius Act to regulate stablecoins is a victory for Circle, as it clarifies the legislation. Recently, in the EU, Circle has advised that future crypto regulations would create dual-licensing burdens by 2026 without harmonization of stablecoin regulations. Current laws are apparently considered sufficient by regulators, but it is an area to monitor.
Wall Street opinions on CRCL stock are generally mixed, highlighting both pros and cons. On the bullish side, J.P. Morgan’s Kenneth Worthington just double upgraded the stock to “Overweight” from “Underweight” with a $100 price target. He noted that Circle’s results showed stablecoins moving into mainstream finance, and he forecasts a big stablecoin market ahead. Goldman Sachs was likewise constructive: it raised its target to $92 from $88 and maintained a “Neutral” rating, calling the Q3 performance “solid” and the guidance “constructive.”
On the more skeptical side, Deutsche Bank trimmed its outlook, cutting the target to $90 from $147 with a “Hold” rating. It agreed Q3 was “very solid” but said it scaled back estimates for slower USDC growth.
Following recent volatility, analysts remain cautious. CRCL stock barely has a “Moderate Buy” consensus. However, the average price target is around $167, implying roughly 2x upside from current levels.
Circle’s recent selloff is rooted in legitimate concerns like rates and competition, but Ark Invest’s big buy and analysts’ new targets show there is still bullish conviction. If you believe in USDC’s role and Circle’s execution and can stomach volatility, this dip could be attractive. If not, it might be better to wait for clearer visibility on rates and USDC margins. Regardless, any bet here is a play on the future of digital dollar payments, a highly debated theme in finance today.
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On the date of publication, Nauman Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
