On Tuesday, USDC issuer $Circle Internet Corp.(CRCL)$ plummeted by over 15%. Is it entering a topping phase?
In terms of news:
ARK Invest's reduction in holdings: ARK Invest has been consistently reducing its stake in Circle recently. On June 18th, ARK Invest sold 300,108 shares of Circle stock across three ETFs, cashing out $44.7 million. On June 24th, ARK Invest sold another 415,844 shares of Circle stock, cashing out approximately $109.6 million. This large-scale reduction in holdings has sparked market concerns over Circle's stock, leading to a decline in its share price.
Profit-taking: Since Circle's stock went public on June 5th, the share price has surged dramatically, rising from the IPO price of $31 to $149.15 on June 18th. After such a significant increase in the stock price, some investors have chosen to take profits, resulting in a pullback in the share price.
Anticipation of increased competition: The Bank for International Settlements has warned of the risks posed by stablecoins and urged countries to accelerate their efforts in tokenizing their own currencies. Wall Street sources have expressed concerns over the potential for increased competition in the future for CircleInternetCorp.(CRCL).
Compass Point analyst Ed Engel stated in a report to investors on Tuesday that stablecoin legislation will lead to increased competition for CRCL, which could put pressure on its market share. Engel and his team have given $Circle Internet Corp.(CRCL)$ a neutral rating and set a target price of $205.
Analysts from Coin Metrics wrote, "Based on Circle's total revenue of $1.67 billion and net income of 157millionin2024,CRCL is currently trading at a multiple of approximately 37 times trailing revenue (P/S) and 401 times trailing net income (P/E). These multiples far exceed those of similar fintech companies, such as NuBank (around 27 times), $Robinhood(HOOD)$ (around 45 times), and even $Coinbase Global, Inc.(COIN)$ (around 57 times), the latter of which has a more diversified revenue base and higher profit margins."
$Tiger Brokers(TIGR)$ International's analysis anticipates that the fair target price for CRCL is around $200. Read>> CRCL: with a HOLD Rating and a $200 Price Target
Overall, although Circle is leveraging the GENIUS Act to gain a first-mover advantage in the regulated market, its large market cap may imply that "narrative-driven enthusiasm seems to have outpaced fundamentals."
Moreover, 56% of USDC's reserve income goes to $Coinbase Global, Inc.(COIN)$ , which also contributed to COIN's 12% surge on Tuesday, leading the S&P 500 (.SPX).
Coinbase is one of the major participants in stablecoins, co-founding USDC with Circle and sharing 50% of its revenue. As the stablecoin market grows, so does Coinbase's income. Stablecoin-related revenue grew by 50% year-over-year in the first quarter of 2025.
Additionally, Coinbase has launched a new merchant payment product that allows e-commerce businesses to accept stablecoin payments, directly challenging traditional payment networks.
However, $Coinbase Global, Inc.(COIN)$ is currently trading at $344.82, which is 19.72% above the institutional target price of $276 listed in the stock analysis section of the Tiger app. It remains to be seen whether COIN will experience a pullback from this near five-year high range.
I'm still a bit hesitant to buy at the moment.
Reading from @Tiger_Contra 💰GENIUS ACT Passed: Circle Sells on News? Stablecoin US/HK/A-Shares Watch
I found there may be some other opportunities worth looking into, for lik $PayPal(PYPL)$ , $Visa(V)$ and $MasterCard(MA)$?
So far this year, $Circle Internet Corp.(CRCL)$ has surged by over 600%, $Coinbase Global, Inc.(COIN)$ has risen by 38.87%; $Visa(V)$ has increased by 11.26% this year; $MasterCard(MA)$ has gone up by 5.88% this year; in comparison, $PayPal(PYPL)$ has declined by 13.79% this year.
The data from Trading View seems a bit inaccurate.
$PayPal(PYPL)$ and $MasterCard(MA)$ have underperformed. Is there a catch-up opportunity? Are they undervalued?
Below is the AI's fundamental and valuation analysis of $PayPal(PYPL)$ :
Revenue and Profit: In the first quarter of 2025, PayPal delivered a double-growth report card in terms of revenue and profit, with a net profit of $1.287 billion, up 45% year-over-year, and an operating profit of $1.53 billion, with an operating profit margin of 19.6%. Additionally, the company's free cash flow exceeded $1 billion, with cash on hand reaching $15.4 billion, and well-controlled liabilities, making the balance sheet defensive.
Business Growth Potential: Although the brand payment's annual growth rate is only 7%, Braintree (PSP/unbranded) has a growth rate of 26%, and Venmo grew by 8%. Moreover, PayPal is enhancing its business growth potential by increasing pricing power, boosting brand revenue, and more effectively monetizing Venmo.
Cost Control and Efficiency Optimization: PayPal's strategic cost management has significantly increased earnings per share by 146%, reflecting a strong profit momentum. The company is laying off 7% of its workforce and conducting a comprehensive review of existing operations to improve cost efficiency.
$PayPal(PYPL)$ is considered undervalued by some investors and analysts. Here is the analysis of whether it is undervalued:
A. Valuation Metrics
Price-to-Earnings Ratio: PayPal's current non-GAAP forward price-to-earnings ratio is approximately 14.9 times, far below its five-year average of 32.7 times. Compared with other companies in the same industry, such as Block (SQ) and Adyen (ADYEN.AS), its price-to-earnings ratio is also at a lower level.
Price-to-Sales Ratio: PayPal's price-to-sales ratio is only 2.1 times, significantly lower than its five-year average of 6.5 times and below the industry average.
Forward Price-to-Sales Ratio: Its forward price-to-sales ratio is 2.5, 58.52% lower than the five-year average.
B. Market Expectations
Stock Repurchase Plan: PayPal has a stock repurchase plan of "at least" $5 billion, which will help reduce the number of outstanding shares, thereby increasing earnings per share.
Analyst Ratings and Target Prices: The average target price of analysts is $95 per share, and both $Bank of America(BAC)$ and $JPMorgan Chase(JPM)$ maintain a "buy" rating, reflecting the mainstream institutions' confidence in its fundamental improvement.
C. Competitive Environment
Despite facing competition from Apple Pay, Google Pay, Stripe, and others, PayPal, as a leader in the digital payment field, still maintains a stable and growing profitability, with a return on capital consistently above 10%.
Overall, $PayPal(PYPL)$ shows certain signs of being undervalued in terms of valuation metrics, fundamentals, and market expectations. However, investors should also pay attention to the competitive pressures it faces and changes in the market environment.
Let's take a look at the fundamental and valuation analysis of MasterCard(MA):
A. Fundamental Analysis
Profitability: Mastercard has strong profitability, with a profit margin of 45.71% over the past 12 months and an operating gross profit margin of 56.32%. This indicates high efficiency and good profitability in payment processing. Additionally, the company's quarterly profit growth compared to the same period last year reached 19.70%, showing an upward trend in performance.
Management Efficiency: The company's return on assets is 22.72%, and the return on equity is as high as 190.56%. This reflects excellent asset utilization and capital operations by the management, effectively creating high returns for shareholders.
Financial Condition: The company has total cash of $877 million, with total cash per share of $9.62. Total liabilities are $1.899 billion, with a total liabilities/shareholders' equity ratio of 291.42% and a current ratio of 1.03. Overall, the financial condition is relatively stable, with sufficient cash reserves to cope with potential risks, though the relatively high debt level requires attention to its debt repayment ability.
B. Valuation Metrics
Price-to-Earnings Ratio: Mastercard's current trailing P/E is 37.25, and its forward P/E is 32.47. Historically, its P/E has fluctuated over the past year but remains within a relatively reasonable range. However, compared to some peers like Visa, its P/E may be slightly higher, reflecting differing market expectations for Mastercard's future growth.
Price-to-Sales Ratio: Its P/S ratio is 17.03, with an enterprise value/revenue of 17.08. The relatively high P/S ratio indicates market expectations for future sales growth but also means the current stock price is not low relative to sales.
Dividend Yield: Mastercard's dividend yield is relatively low, which may be less attractive to investors seeking dividend income. However, it also suggests the company may prefer to reinvest profits for business expansion and to maintain a long-term competitive edge.
C. Market Expectations
Industry Competitive Landscape: In the payment industry, Mastercard faces intense competition from rivals like Visa(V) and AmericanExpress(AXP). Despite this, Mastercard maintains a significant market share and strong competitiveness due to its extensive payment network, strong brand influence, and continuous technological innovation. With the rapid growth of global e-commerce and the popularity of digital payments, Mastercard is well-positioned to benefit from industry trends.
Future Growth Potential: Mastercard is actively expanding into emerging markets, strengthening partnerships with fintech companies, and driving innovation in payment technologies such as mobile payments and digital wallets. These initiatives are expected to bring new growth opportunities and enhance the company's future profitability and market competitiveness.
Overall, MasterCard(MA) is currently valued at a level that is relatively fair but not undervalued. It has solid fundamentals, strong profitability, a stable financial condition, and certain future growth potential. However, higher P/E and P/S ratios reflect that the market's high expectations for its future development are partially reflected in the current stock price.
According to public market analysts' expectations, both $PayPal(PYPL)$ and $MasterCard(MA)$ are expected to have over 10% upside potential. For me personally, PayPal(PYPL) is a bit more attractive.
Source: Tiger Trade
Source: Tiger Trade
In the end: When considering investments in PayPal(PYPL) and MasterCard(MA), it is still necessary to take into account their valuation levels, fundamental conditions, and the competitive landscape of the industry.
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