Up More Than 100% in 3 Weeks, Is Hot IPO Stock Circle a Buy Today?

Investors are always on the lookout for the next big initial public offering (IPO)

What could be better than getting in early on an incredible growth stock

The blem is, IPOs aren't what they used to be

The internet has made stock quick and easy, and social media connects people and ideas

When there's an exciting IPO, investors can run the price up quickly, all in the name of getting in early

But that can add years of stock gains and innovation almost overnight, inflating prices and making them not worth buying

Let's see why investors have been scooping up Circle s and whether or not you should buy it today

Circle is a fin company that issues stablecoins, which are cryptocurrencies pegged to a stable currency

Its USDC stablecoin is pegged to the U

Dollar, and its EURC stablecoin is pegged to the Euro

They are both the leading stablecoins of their kind

The idea of a stablecoin is to create a cryptocurrency that has a stable value and is backed up by non-digital currency

Circle's platform combines quick, digital financial services that are backed by real-world assets

CEO Jeremy Allaire explains that "If you could take what we think of as money, make it digital and available on the internet, then that would dramatically change the way we use money and open up opportunity around the world

That's the idea behind Circle. " Image source: Getty Images

Circle keeps its cash reserves with large U

Banks and also offers money-moving services and tokenized funds, or funds where investors own tokens on a blockchain

How does the company make money

It's also working on launching other ducts, and it has a platform for developers to create digital financial solutions

Risks and opportunities Many people see cryptocurrency, or digital money, as the key to future financial transactions

However, many cryptocurrencies that are traded on have had their values fluctuate vastly over time, making them risky and volatile

Circle aims to do better

Already in the few weeks since its IPO, the company has made some important announcements

It has struck a deal with payments giant Fiserv to develop stablecoin solutions, and it has applied for a bank charter

If apved, Circle will become the first digital-currency bank and will pave the way for the company to offer other assets as tokens on a blockchain

There are many risks here, though

Circle is still starting out and trying to make changes to firmly established systems

While that could lead to incredible growth as digital currency takes hold, the flip side is that it doesn't work out as int

Since it relies on a return rate to make money, it's very much exposed to interest rate movements

If interest rates come down, that could negatively impact the company's operating performance

Even if you believe in the company's vision and capabilities, there's not that much upside at this price

In fact, the stock began to fall last week, and it's been moving downward

Even disruptive stock investor Cathie Wood is already selling her company's s

I'm intrigued by Circle and what it's doing, but I recommend sitting on the sidelines for now and waiting to see if it becomes more reliable and affordable

Jennifer Saibil has no position in any of the stocks mentioned

The Motley Fool has no position in any of the stocks mentioned

The Motley Fool has a disclosure policy.