Circle’s IPO raises concerns over profitability

Financial technology firm Circle’s initial public offering (IPO) has sparked concerns among industry experts regarding its financial health, high distribution costs and valuation, BeInCrypto reported. Matthew Sigel, Head of Digital Assets Research at VanEck, noted that while Circle’s revenue grew 16% year over year, its earnings before interest, taxes, depreciation and amortization (EBITDA) declined by 29% and net income dropped 42%, indicating weakening profitability. He attributed this decline to rapid expansion, expensive service integrations and the discontinuation of revenue streams like Circle Yield. Crypto analyst Omar questioned Circle’s $5 billion valuation, pointing to high distribution costs, shrinking gross margins and potential market disruption due to U.S. deregulation. Meanwhile, Wyatt Lonergan, General Partner at VanEck, suggested that while Circle could drive growth through partnerships in the stablecoin sector, poor market conditions might lead to a discounted acquisition by Coinbase.