Circle's recent IPO filing revealed its considerable financial ties to Coinbase. In 2024, Circle paid Coinbase $908 million for USDC stablecoin distribution, which accounted for more than half of its earnings. This partnership arose from their previous participation in the Centre consortium.
Despite a revenue increase to $1.67 billion in 2024, Circle's profits fell. EBITDA plummeted 29% to $285 million, while net income decreased 42% to $155.67 million. Analysts are concerned about the company's high distribution expenses, which mostly apply to Coinbase. USDC's rapid growth comes at a cost. Its supply doubled last year, resulting in a $60 billion market capitalization. However, Circle's reliance on Coinbase and high distribution costs present concerns.
Analysts are now criticizing Circle's $5 billion valuation target. They point to potential deregulation, increasing competition, and decreases in interest rates as headwinds. Some speculate about takeover prospects, naming Coinbase and Ripple as potential buyers. Circle recognizes these issues and focuses on new worldwide alliances to diversify its operations. The company's future is still uncertain as it navigates the competitive stablecoin landscape.
