QS Research · Michael Burry's Scion Capital analyst template · 2006
Circle Internet Group, Inc. (CRCL)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case 0% · downside -24% · upside -1%
Using section 13's TTM-to-Sep-30-2026 net income base of $462.9M, the base case is 40.2x x $462.9M = $18.61B, or 0% versus today; the downside case at SOFI's 30.5x is 30.5 x $462.9M = $14.12B, -24.1%; the best justified close-peer upside at HOOD's 39.7x is 39.7 x $462.9M = $18.38B, -1.2%, and XYZ's 114.9x is not a justified comp at 0.00 similarity. The market is not missing a cheap asset: at $69.48 the stock is 40.2x TTM earnings and 4.82x book with 12.0% ROE, while FY2023-FY2025 cycle net income averaged -$2.2M ($44.9M, $18.1M, -$69.5M), so normalized earnings power is unproven. What is missing is proof that TTM earnings persist: Q3 2026 reserve income fell 8% to $658M on a 3.5% reserve return rate while USDC ended flat at $73.9B and other revenue leaned on $182M of one-off ARC presale. I am on watch, not long or short, because the rule is not met in either direction: base 0% fails the +30% long test and base 0% also fails the -30% short test, with the downside only -24.1%.
Key numbers
- Share price: $69.48
- Market cap: $18.61B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $3.03B
- P/E (TTM): 40.2x
- Price / book: 4.82x
The 15 boxes
- ✓ 1. Long-form business notes
Circle runs a full-stack internet financial platform built on USDC/EURC stablecoins, but its revenue is still reserve income earned on the assets backing those stablecoins, supplemented by fee-based infrastructure (Circle Mint redemptions, CCTP V2 fast transfers, xReserve subscriptions) and newer application products (CPN, StableFX). The company changed a lot between FY2023 and FY2025: it acquired Hashnote/USYC (Jan 2025), launched CPN (May 2025), CCTP V2 (Mar 2025), Gateway (Jul 2025) and xReserve (Nov 2025), put Arc in public testnet, and got conditional OCC approval for Circle National Trust (Dec 2025), while the GENIUS Act became law on July 18, 2025. Reported XBRL figures show revenue of $19.9M (FY2023), $15.2M (FY2024, -24%) and $109.8M (FY2025), with operating income swinging from $269.5M to $167.2M to -$96.4M and net income from $44.9M to $18.1M to -$69.5M — in every year net income sits well below or above operating income, so below-the-line items, not operating earnings, moved the bottom line. This is a spread business on reserve balances, so it should be judged on normalised earnings, book value and return on equity rather than on any single year's net income.
- ✓ 2. Competitive advantage
The numbers show no durable advantage yet. FY2023 to FY2025 revenue went $19.9M, $15.2M, $109.8M, but operating income fell from $269.5M to $167.2M to -$96.4M and net income from $44.9M to $18.1M to -$69.5M (S26); the FY2025 loss is an operating loss, not a one-off. Management calls the platform 'difficult to replicate', yet names Tether as its primary competitor and lists banks, payment networks, blockchain providers and yield-bearing digital assets as competitors. Licensing is a barrier, but the 10-K itself says competition will intensify, offshore issuers have regulatory and tax advantages, and the GENIUS Act bars stablecoin issuers from paying yield while TMMFs can pay it.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-30) total revenue and reserve income rose 16.9% to $864.9 million, but the growth came entirely from other revenue ($207.3 million, up 626.8%, including ARC token presale revenue) while reserve income fell 7.5% to $657.6 million on a 3.5% reserve return rate versus 4.2% a year earlier. Margins widened sharply: RLDC margin 52% vs 39%, Adjusted EBITDA $317 million (+90%, 70% margin). Operating income was $208.3 million versus $81.0 million, but net income from continuing operations was only up 5% to $226 million because other income, net dropped to $19.9 million from $72.1 million. USDC balances were roughly flat at period end ($73.9 billion vs $73.7 billion), and market share slipped to 27% from 29%.
- ✓ 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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