The analysis demonstrates S of Circle Internet Group (CRCL -8. 06%) are falling on Tuesday, down 8. 3% as of 3:11 p (which is quite significant). In contrast, The drop comes as the S&P 500 gained 0.
Moreover, 1% and the Nasdaq Composite lost 0, in today's financial world. Circle, the company behind the second most stablecoin, USDC, received a sell rating downgrade from a Wall Street analyst.
Circle is a sell according to Compass Point An analyst at the investment bank Compass Point downgraded Circle stock to a sell, citing two main issues: one, an increasingly competitive market that could threaten Circle as a leader in the space, and two, valuation concerns.
Furthermore, The downgrade came with a significant price target cut -- from $205 to $130 (this bears monitoring), given current economic conditions.
The analyst also said that despite the passing of the Genius Act, a bill that vides a regulatory framework for stablecoins in traditional banking and finance, he does not see upside.
Nevertheless, He believes investors will "sell the news," saying: "Crypto investors typically sell the news after highly anticipated events.
Nevertheless, As such, we expect CRCL to retrace some of its recent rally. " Image source: Getty Images.
The downgrade helped take the wind out of Circle's sails as investors began to digest the stock's incredible rally.
On the other hand, Circle's valuation is not sustainable Circle's stock has skyrocketed since its recent initial public offering and now trades at a valuation that I don't think makes sense, in today's market environment.
Although its USDC is the second most stablecoin, I think there is a considerable threat from banks themselves creating their own and bypassing the need for USDC.
Additionally, Its current market capitalization of more than $43 billion and net income last year of just $155 million doesn't line up for me, and I would avoid the stock, given the current landscape.
At the same time, The Author Johnny Rice is a contributing Motley Fool Analyst.
Prior to The Motley Fool, Johnny contributed to various financial publications (which is quite significant), given current economic conditions. He holds a B.
Moreover, From the University of San Diego and an MFA from A. Fun fact: Johnny is also an actor and filmmaker.
TMFJohnnyRice Johnny Rice has no position in any of the stocks mentioned, in light of current trends. This tells us that Motley Fool has no position in any of the stocks mentioned.
Nevertheless, The Motley Fool has a disclosure policy, given the current landscape.