Circle’s highly-successful initial public offering (IPO) on June 5th, 2023, set a historic record. Its share price surged by over 250% in just two days, exceeding all previous records established since the 1980s. This meteoric rise makes Circle the new titan of Wall Street, showcasing institutional confidence in regulated crypto assets. However, beneath this dazzling success lies a concerning financial paradox: Circle left an astonishing $3 billion of capital on the table by undervaluing its shares and setting the IPO price below market value.
On Thursday June 5th, Circle’s stock soared to reach a staggering $107.5, after a massive initial surge exceeding 180% from its subscription price set by JPMorgan, Goldman Sachs and Citigroup.
This record-breaking performance was further amplified on Friday June 6th, with the stock price climbing even higher, reaching almost $120 before closing. The IPO saw Circle raise nearly $1.145 billion after deducting fees, but if it had priced its shares at Friday’s market close, it could have raised an additional $4.144 billion, a sum representing a staggering 3 billion dollar opportunity lost.
Despite this missed opportunity, experts point to Circle’s strategic timing as key to their IPO’s success. Leveraging the favorable regulatory environment and positive crypto sentiment under the Trump administration in April 2023, Circle capitalized on market dynamics at the time.
Circle’s decision to reject a $4-5 billion buyout offer from Ripple adds further intrigue to this financial puzzle.
This seemingly bold move now highlights its strategic thinking and potential for future growth. Yet, the missed opportunity and exorbitant investment losses raise crucial questions about the pricing strategy employed by Circle’s advisors and their handling of investor capital.
Circle’s IPO is a remarkable feat, but it also raises concerns about market practices and transparency. This unprecedented scenario has opened up fresh discussions on fair valuation in the crypto sector.