Circle Internet Financial Corp. (CRCL) slipped after investment firm Compass Point Research downgraded its rating from Neutral to Sell. Analysts noted that if the Federal Reserve cuts interest rates, Circle’s earnings are expected to decline, which could impact its future profitability.
Circle Internet Corp. (CRCL)
That was enough to spook some investors. The party might be cooling down—again.
But here’s the thing: Wall Street downgrades don’t drive my decisions.
Why I Don’t Chase Analyst Ratings
Let me be clear—I’m not claiming I know more than the analysts. They have research tools and financial models. But personally, I find many analyst upgrades and downgrades are reactive rather than predictive.
They often follow the trend instead of getting ahead of it.
A downgrade after a run-up or a bump after a selloff feels more like catching up to reality than offering real foresight. So for me, these ratings might be interesting to read but they don’t move the needle on whether I buy, hold, or avoid a stock.
Why I’m Avoiding CRCL Right Now
Even without the downgrade, Circle isn’t on my radar and for a few simple reasons:
1. Valuation Feels High
While the stock has pulled back a bit, it's still nowhere near its 52-week low, and far from its original listing price. It might not be at its peak, but I still find the current valuation uncomfortably high for my taste.
When I compare the price to what I think the company is fundamentally worth, it just doesn’t feel like a bargain. And I prefer to enter positions where I see clear value, not hope.
2. No Dividend = No Passive Income
Another red flag for me is the lack of a dividend. I’m cautious with growth stocks that offer no dividend yield, especially ones that trade at high valuations.
Dividends help cushion volatility. Without that income, I’d be relying entirely on price appreciation, which given the current macro uncertainty, feels too risky for my style.
3. Too Volatile for My Risk Tolerance
Circle’s price action feels more like a rollercoaster than a steady climb. And since I consider myself a relatively risk-averse investor, high-volatility names just don’t fit my strategy.
There’s a place for bold, high-growth plays but I prefer stability.
4. Earnings Are Too Close
With earnings scheduled for August 12 (pre-market), the timing alone is enough to keep me on the sidelines. I don’t want to buy a stock close to its earning date unless I already hold a strong long-term conviction.
Buying into earnings is often more like a coin toss than a calculated move and I prefer to invest with a thesis, not gamble on short-term beats or misses.
Final Thoughts: Let the Dust Settle
Circle had its moment, riding the wave of hype and interest in fintech and digital infrastructure. But with uncertainty around rate cuts and earnings ahead, this feels more like a time to watch than to act.
I'm not shorting the stock. I'm not cheering for it to fall. I'm just saying: It’s not for me.
I’ll continue to monitor the space and revisit if fundamentals or price action shift. But for now, CRCL stays off my watchlist, and I’ll be watching earnings from a distance with no pressure and no FOMO.
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