Circle Internet Corp. (CRCL) saw its stock plummet 5.5% in morning trading on Friday, marking a significant pullback for the recently listed stablecoin issuer. The drop comes amid growing concerns about the company's valuation and warnings from analysts about the sustainability of its post-IPO rally.

Coinbase also dipped 4% in morning trading.

Circle, which went public earlier this month, had seen its shares surge by nearly 600% from its initial offering price, pushing its market capitalization to a staggering $50 billion. However, this meteoric rise has led to skepticism among market observers. Analysts at Bernstein and Evercore ISI have cautioned that while stablecoins have potential use cases in cross-border transactions and employee payouts, their adoption in everyday retail payments faces significant hurdles.

The pullback also aligns with broader warnings about the recent IPO frenzy. Matt Kennedy, a senior strategist at Renaissance Capital, noted that Circle's performance in its first month of trading was "unprecedented" for a billion-dollar IPO, suggesting that the stock may have been driven more by speculation and fear of missing out than by fundamentals. As the lock-up period for insiders approaches, typically six months after the IPO, there are concerns about potential selling pressure on the stock.