Cathie Wood’s Ark Invest Buys $30 Million Circle Shares After Earnings

TLDR

• Cathie Wood’s Ark Invest bought over 353,000 Circle shares worth $30.5 million across three ETFs on Wednesday
• Circle’s stock fell 12.2% to $86.30 despite reporting 202% net income growth and 66% revenue increase to $740 million
• USDC stablecoin circulation jumped 108% year-over-year to $73.7 billion, giving Circle 29% of the global stablecoin market
• Investors worry about Circle’s dependence on interest income from reserves as Federal Reserve rate cuts loom
• Circle CFO Jeremy Fox-Geen said falling interest rates could benefit the business by increasing economic activity

Ark Invest purchased $30.5 million worth of Circle shares on Wednesday as the stablecoin company’s stock dropped following its third-quarter earnings report. The investment firm bought 353,328 shares across three exchange-traded funds.

The ARK Innovation ETF bought 245,830 Circle shares. The ARK Next Generation Internet ETF added 70,613 shares while the ARK Fintech Innovation ETF purchased 36,885 shares.

Circle Internet Group, CRCL

Circle’s stock fell 12.2% on Wednesday to close at $86.30. The drop came despite the company reporting strong quarterly results.

The stablecoin issuer reported $740 million in total revenue for the third quarter. This represented a 66% increase compared to the same period last year.

Circle’s net income surged 202% to $214 million. The company processed $9.6 trillion in on-chain volume during the quarter.

USDC circulation reached $73.7 billion at the end of September. This marked a 108% increase from a year earlier.

Operating expenses rose 70% to $211 million. This increase reflected higher headcount and stock-based compensation costs.

Adjusted operating expenses increased by 35%. Allaire credited growth to commercial partnerships and cross-industry collaboration.

Market Concerns Over Interest Income

The stock decline reflected investor concerns about Circle’s revenue sources. Most of the company’s income comes from interest paid on assets backing USDC.

These assets include short-term Treasury bills. Investors worry this income could face pressure from Federal Reserve rate cuts expected next year.

According to Knockoutstocks, 22 Wall Street analysts rate Circle Internet as a “Hold” with 4 sells, 10 holds and 8 buys.

Analyst Views and Future Plans

Investment bank William Blair gave Circle an “outperform” rating. Analysts encouraged investors to build positions while the stock trades lower.

The analysts also outlined risks including regulatory uncertainty and competition. They mentioned concerns about stablecoin infrastructure and lower interest rate pressure.

Circle announced it is exploring a native token for its Arc blockchain. The company launched the Arc public testnet last month for its Layer 1 stablecoin-centric chain.

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