Circle Internet Stock (CRCL) Falls on Equity Offering As Volatility Continues

Circle Internet Group shares (NYSE: CRCL) have pulled back overnight, before recovering slightly in the pre-market session to trade 3.12% lower at $158.11. The downwards move came following the announcement of a 10 million share equity offering, which has caused some uncertainty in markets.

The offering, which includes 2 million shares from the company and 8 million shares from selling stockholders comes after CRCL has added 96.1% since the IPO, just over 2 months ago.

Once concern for markets is that Circle will not receive any proceeds from the sale of shares by existing stockholders. This absence of direct capital infusion for the company, coupled with the dilutionary effect of the new shares, initially triggered a negative reaction.

The equity offering follows Circle's recent earnings release that initially saw the stock trade up at $189.92, before fading into the close at $163.12 for a more than 12% swing to the downside, albeit with 1.27% in gains on the day by the close.

Recent analyst downgrades have further dampened market sentiment. Compass Point downgraded the stock from “Neutral” to “Sell” with a price target of $130, citing concerns about long-term economics relative to the company's valuation.

Tiger Securities lowered its price target from $200 to $180, maintaining a “Hold” rating, and pointed to margin pressures and expense growth as key concerns.

The high of $298.99 that followed the IPO fever is now a long way away, yet so is the low of $64. Such a wide range, in a little over two months, highlights the volatility and risks associated with investing in names in the immediacy of an IPO, particularly in a sector such as digital assets than has a history of big swings, even if much of that is slowing.