QS Research · Michael Burry's Scion Capital analyst template · 2006
Circle Internet Group, Inc. (CRCL)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction medium · base case -27% · downside -48% · upside +21%
The market is paying 39.3x TTM earnings for a stablecoin issuer whose Q3 2026 reserve income fell 8% and whose USDC circulation was flat, while the reported beat leaned on $182M of non-recurring ARC token presale revenue. On section 13's TTM base of $462.9M net income to common, the peer-median 28.5x case is $49.27 (-27%), DLO's 20.3x case is $35.09 (-48%), and PAYO's 47.4x case is $81.94 (+21%), so the risk/reward is negative but not enough for the short rule's -30% base. The balance sheet is strong ($1.70B cash/ST investments, $3.86B equity, 12.0% ROE) and regulatory catalysts exist, but the recurring engine is rate- and share-constrained. I would watch, not own, until reserve income and USDC circulation re-accelerate or the price moves closer to the base-case value.
Key numbers
- Share price: $67.88
- Market cap: $18.18B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $3.03B
- P/E (TTM): 39.3x
- Price / book: 4.71x
The 15 boxes
- ✓ 1. Long-form business notes
Circle is a stablecoin-network company whose revenue is primarily reserve income on assets backing USDC and EURC, organized around Arc, Circle Digital Assets and Services, and Circle Applications. The XBRL facts show FY2023-to-FY2025 Revenue rising from $19.9M to $109.8M, while Operating income swung from $269.5M to -$96.4M and Net income to common from $44.9M to -$69.5M; Operating cash flow rose from $139.6M to $542.1M. The 10-K describes a 2025 expansion into Arc testnet, CPN, StableFX, xReserve, USYC and CCTP V2, with USDC above $75B circulation at December 31, 2025. The sources do not reconcile XBRL Revenue with the 10-K statement that revenue is primarily reserve income, nor provide an earlier annual report business description or TTM figures.
- ✓ 2. Competitive advantage
The filings describe a licensed, regulated stablecoin issuer whose moat is regulatory standing and a platform management calls hard to replicate, not pricing power: its main rival Tether is bigger and offshore, and yield-bearing tokenised money market funds compete directly with a non-yielding stablecoin. The FY2023-FY2025 record shows no durable margin: operating income fell from +$269.5M (FY2023) to -$96.4M (FY2025) and net income to common from +$44.9M to -$69.5M, even as operating cash flow rose to $542.1M (FY2025) and equity grew to $3.33B. Returns on that equity were negative in FY2025 on the reported net income to common. Competition is explicitly expected to intensify, including from banks once the GENIUS Act regime takes effect.
- ✓ 3. 10-Q takeaways
Q3 2026 total revenue and reserve income rose 17% to $865 million, but the entire increase came from other revenue ($207 million, up 627%), which included $182 million of ARC token presale revenue; core reserve income fell 7.5% to $658 million because the reserve return rate dropped 61 bps to 3.5% while average USDC in circulation grew only 8%. Margins improved sharply with lower distribution payments: revenue less distribution costs of $453 million (+55%) and RLDC margin of 52% versus 39%, Adjusted EBITDA of $317 million at a 70% margin, and net income from continuing operations of $226 million (+5%). FY2026 guidance in the same-quarter release is numeric and unchanged: USDC in circulation 40% CAGR multi-year, other revenue $310-330 million, RLDC margin 41.7-43.7%, adjusted operating expenses $570-585 million.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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