Circle will be officially listed tonight. Is the IPO price of $31 worth it?

The US stablecoin giant Circle will begin trading on the New York Stock Exchange today (June 5) with the stock code CRCL. Circle raised nearly $1.1 billion at $31 per share, which is higher than previously expected. Is Circle's pricing reasonable? After going public today, will it have the opportunity to replicate eToro's model and surge higher?

( Circle IPO orders exploded 25 times, and will be officially listed today at $31 )

Circle PE ratio has reached 44.93

Circle sold 14.8 million shares in the IPO, while existing shareholders sold 19.2 million shares. The number of shares issued after the IPO is:

• Class A common stock: 202,234,661 shares
• Class B common stock: 20,305,454 shares (with 5 times voting rights)

A total of 222,540,115 shares.

According to the full-year financial report for 2024 submitted by it, the net profit for the full year of 2024 was US$155,667,000, and the EPS was 0.69. Based on the issue price of US$31, its P/E was as high as 44.93.

Note: This value is only a reference value estimated by the author based on the announcement information.

Comparison of PE ratios of crypto companies

The author compares several crypto-related listed companies, including the cryptocurrency exchange Coinbase, the new financial trading platform eToro that just held its IPO in May, and the online brokerage Robinhood as shown in the following table. Circle's PE ratio is close to the upper limit compared with the other companies.

Does Circle have a chance to follow the eToro IPO hype?

The newly established financial trading platform eToro was successfully listed on the Nasdaq Stock Exchange on May 14th with an IPO price of US$52 per share. It opened at US$69 and soared to US$74 on the second day, successfully setting off a wave of IPO fever.

eToro's revenue in 2024 will reach $1.264 billion, with a net profit of $192 million. Its current P/E is 27.83, much lower than Circle's 44.93. After Circle goes public today, will it have a chance to replicate eToro's model and surge higher? Just wait for tonight's opening!

Chris Dixon and David George, two co-partners of the well-known venture capital firm a16z, discussed the future development of "AI x Crypto" on June 1. They pointed out that AI solves "cognition and reasoning problems" while cryptocurrency solves "trust and collaboration problems." They also emphasized that in the future, AI will not only create content, but will also place orders, make payments, and run business on its own to complete the entire business process. Cryptocurrency is the key to making this automated business truly a reality.

Dixon said that stablecoins can now achieve instant global transfers, which is equivalent to creating a "financial version of WhatsApp." Not only can it greatly reduce intermediary costs, but it can also make transaction settlement and verification processes seamless. The two also predicted that in the future, "AI x Crypto" will create a "native digital economy."

Key Summary

• AI drives content production, and Crypto solves financial flows and collaboration. The combination of the two poses a challenge to traditional business models such as Google and Visa.

• The use of stablecoins has skyrocketed, Stripe has joined the battle, and cryptocurrency has finally landed.

• The rise of generative AI has impacted search platforms and the content industry, and the lack of a business model may hollow out original online content.

Cryptocurrency is the best solution to money flow and copyright issues

George said that in the AI ​​world, many "middle-layer" problems are gradually emerging, including:

• Money Flow

• Copyright holder

• Can content still make money through clicks in an AI world?

He believes that these trust and collaboration issues are exactly what blockchain is good at. This also echoes his previous point that he believes that cryptocurrency is actually a "second-order effect" of social media:

“If there were no social media platforms like Twitter (X) to support it, it would have been rejected by mainstream media long ago, and cryptocurrency would not have been able to gain a foothold.”

Stablecoins are like the cross-border payment version of WhatsApp, rewriting the traditional financial system

Dixon shared that the US government’s strict control over cryptocurrencies over the past four years has caused the entire industry to stagnate, but the infrastructure has become more and more stable:

• Earlier, the transfer fee was $10, but now you can transfer money in 1 second and less than 1 cent by just downloading Coinbase Wallet.

• Stablecoin monthly transaction volume has reached trillions of dollars, far exceeding Visa

He cited the example of the stablecoin payment network, which is like WhatsApp's subversion of text messaging, breaking the traditional financial "layered charging" model. Large companies such as Stripe have also begun to introduce stablecoin cross-border payment applications, such as:

• Stripe shares case study showing SpaceX using stablecoins to pay overseas Starlink contractors

• Programmable stablecoins can prevent fraud, such as invoice fraud

AI changes the order of content, search and platforms. Who will maintain the website?

George warned that today’s generative AI (such as ChatGPT) has actually swallowed up the entire web content, without even clicking into the website. He pointed out that this not only destroys SEO, but also makes platforms such as Wikipedia and StackOverflow unable to survive, directly marginalized, and original content cannot be exchanged for reader clicks and advertising revenue.

But if AI generates answers directly in the model without providing new incentives for contribution, who will create content in the future? And where should these AI models continue to learn from? This becomes the biggest problem.

Don’t just focus on AI doomsday theories, think about how content sites can survive

George emphasized that the discussion of AI risks should not be limited to the ultimate proposition of "destroying humanity, doomsday theory". What is really worth thinking about is:

• AI will reshape the entire Internet business model

• The traffic economy may collapse

• A large number of creators and websites may not be profitable

He believes that a discussion should begin:

"If we destroy the business model of these original platforms, who will be willing to share knowledge for free in the future?"

AI and Crypto are not in conflict, but complementary.

Both Dixon and George believe that AI and cryptocurrency are not in competition, but complementary:

• AI: Making machines smarter and improving productivity

• Crypto: Solve the problems of organizational coordination and value exchange, and form a network-native economy

With the emergence of AI agents in the future, payment and trust mechanisms will be needed between humans and AI, and even between AIs. This is exactly where blockchain can play a role.

Winner takes all is the iron rule of the tech world. Don’t choose the wrong side

At the end of the conversation, both emphasized that " winner takes all " is the iron rule of the technology world. If you choose the wrong platform, you will just sit on the bench. George mentioned his investment philosophy:

“In each category, I just want to choose the best one. If you only get second place, it’s better not to invest.”

( Is AI doomsday theory a hoax? AI crypto czar Sacks: EA, Anthropic and Biden staff deliberately manipulated it )