Why Circle Stock Jumped 31% in February
Key Points
Circle saw revenue growth accelerate in the fourth quarter.
The company appears to be benefiting from the growth of prediciton markets like Polymarket.
Non-interest revenue is growing defraying a key risk.
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Shares of Circle Internet Group (NYSE: CRCL), which makes the stablecoin USDC, jumped last month on a strong fourth-quarter earnings report.
The stock was actually in the red most of the month, trending with a slide in Bitcoin and weakness in software stocks on fears of AI disruption, but the earnings report impressed investors as the company finished up 31%, according to data from S&P Global Market Intelligence.
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As you can see from the chart below, nearly all the company's gains came at the end of the month, after the earnings report came out.
CRCL data by YCharts
What happened with Circle
Circle delivered a pleasant surprise for investors, posting earnings well above expectations.
Revenue jumped 77% to $770.2 million, accelerating from earlier in the year, and easily beating the analyst consensus at $745 million. On the bottom line, Circle also blew past expectations with adjusted earnings per share of $0.43, compared to estimates of $0.25.
The USDC coin is seeing circulation increase rapidly, rising 72% to $75.3 billion, and it said that its USDC onchain transactions posted 247% growth to $11.9 billion. Its euro stablecoin is also delivering strong growth, with circulation up 284% to 310 million euros.
Circle seems to be enjoying a tailwind from the growth of prediction markets like Polymarket, which runs on USDC. The company also issued a new product, Arc, which can handle payments among a wide range of asset classes.
Circle reported 136% growth in revenue less distribution costs to $309 million, well ahead of its growth rate earlier in the year. On the bottom line, adjusted earnings before interest, depreciation, and amortization (EBITDA) jumped 412% to $167 million.
In addition to its launch of Arc, Circle also received conditional approval to establish a national trust bank, strengthening USDC infrastructure and acceptance.
Almost everything seems to be going right for Circle, and the report shows the company firing on all cylinders.
Image source: Getty Images.
What's next for Circle
Circle also issued solid guidance for 2026, continuing to call for a 40% compound annual growth rate in USDC in circulation, a multi-year target. It also sees $150 million-$170 million in other revenue.
The emergence of its other revenue stream is a good sign, as the company has historically made most of its revenue from collecting interest earned on the cash and treasuries that back its stablecoin.
Keep your eye on the growth of prediction markets like Polymarket, which could fuel further gains for Circle.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
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