Circle Internet Group (CRCL) made a historic entrance to public markets on Thursday, jumping 168% from the offer price in its NYSE debut. That is the biggest first-day pop for a billion-dollar US IPO in our 30+ year records.
Circle's initial performance will undoubtedly encourage more IPOs in the cryptocurrency space, but it is also the latest in a series of well-received VC-backed IPOs over the past month (e.g. HNGE, MNTN, ETOR).
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The world's #2 stablecoin issuer had originally planned to raise $600 million by offering 24 million shares at a range of $24 to $26, but immense demand led it to raise $1.05 billion by offering 34 million shares at $31 per share. The stock began trading on Thursday at $69, or 123% above its offer price, and finished the day at $83.23 (168%). That gave it a fully diluted market cap of about $21.5 billion at the close, compared to $7.9 billion at pricing, or the proposed $9 billion valuation of its abandoned SPAC merger in 2022.
Billion-dollar IPOs rarely double on day one, even when they operate in a hot space, in part because there is not the same share-supply imbalance seen with smaller IPOs. Over the past 30 years, the roughly 200 billion-dollar US IPOs have averaged a first-day return of about 16%. Of that group, only five other companies have risen at least 100% on the first day. High-flying billion-dollar IPOs over the past five years do not have a good track record after the first-day close, though this is partly due to the excessive valuations of 2020-2021. Of the 10 billion-dollar IPOs with the biggest first-day pops of the past five years, all but one (DASH) trade below the first-day close, and four (RLX, BEKE, ARRY, BMBL) trade below offer.
Circle represents a unique play on the digital asset industry, with stablecoins serving as the plumbing of what it calls the "new internet financial system." Outside of Coinbase (2021 direct listing), public investors don't have many options when it comes to sizable pure-play cryptocurrency stocks. The company went public with the wind at its back: While the amount of its USDC stablecoin in circulation has fluctuated dramatically over the past five years, it ended the first quarter at an all-time high of about $60 billion. It also benefits from a more crypto-friendly US administration.
