The mesmerizing surge of over 168% on the debut has put Circle (CRCL) among one of the most promising publicly traded tech firms, especially involved in crypto, on day one. This listing marked the largest first-day pop for a billion-dollar US IPO in over 30 years, but an analyst has warned investors to stay away from buying CRCL stock for an apparent reason.
While the stablecoin giant, known for its USDC token, saw intense investor enthusiasm and an explosive first-day trading session, a former Goldman Sachs analyst, Dom Kwok, has issued a stark warning to resist the hype and avoid buying CRCL stock right now.
In his latest X post, Kwok explained that such dramatic first-day pops are often engineered by bankers to create excitement and bullish sentiment.
“When bankers price an IPO, they engineer a “pop” on IPO day, as we just saw with Circle’s 168% pop,” he said, adding, “This sharp price increase creates huge excitement and bullish sentiment around the company.”
Kwok, who formerly worked on pricing tech IPOs at Goldman Sachs, stated that Circle’s 168% surge is a textbook example. This sharp increase draws in more investors, fueled by FOMO (fear of missing out), but the real opportunity occurs months after the stock’s listing.
While most investors are cherishing the first-day gains in CRCL, which spiked over 200%, Kwow has highlighted the importance of the IPO lockup period, a contractual restriction that prevents insiders—like employees, executives, and early investors such as venture capital funds—from selling their shares immediately after the IPO. For Circle, this period will last 180 days, as disclosed in its S-1 filing with the SEC, meaning insiders can begin selling around early December 2025.
“Wait 90-180 days after IPO to invest. not just to allow for price discovery, but because that’s typically when the lockup period ends,” he said.
Historically, the end of lockup periods often triggers significant selling pressure, driving stock prices down. A notable example is Facebook (now Meta Platforms, Inc.), which saw its stock plummet 50% in 2012 after its lockup ended, as millions of shares flooded the market.
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