Ex-Goldman Executive On Circle's 168% IPO Spike: Don't Rush To Buy Stock As Bankers Engineer A ‘Pop' — Cites Facebook Example

Former Goldman Sachs executive and Web3 entrepreneur Dom Kwok advised against investing in Circle Internet Group CRL following its bumper listing, suggesting investors wait for the lockup period to end.

What Happened: In an X post dated Friday, Kwok, co-founder of EasyA, share his investment advice regarding the recent initial public offering of the stablecoin issuing company. He cautioned investors against buying into the hype created by the engineered “pop” on IPO day.

“As we just saw with Circle’s 168% pop, this sharp price increase creates huge excitement and bullish sentiment around the company. All eyes focus on the stock, drawing more investors in and driving price higher. but don’t fall for it,” Kwok said.

Kwok advised retail investors to wait 90-180 days after the IPO to invest, allowing for price discovery and the end of the lockup period.

“When the lockup period ends, insiders and early investors typically sell their shares, causing lots of selling pressure and pushing price down. this typically gives long-term retail investors a great opportunity to buy shares at a discount,” Kwok added. In the case of Circle, the lockup period is 180 days.

Kwok also cited the example of Facebook, which was later rebranded as Meta Platforms Inc. META. After a blockbuster IPO, the shares hit new lows as the lockup period ended.

While several users backed Kwok’s analysis, WilliamNextLvl who described themselves as having “stock investing expertise,” differed, saying, “The IPO market is smoking hot right now. Ride the momentum.”

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Why It Matters: Circle’s IPO was indeed a sensation, with shares popping 168% on its Wall Street debut. Seasoned investor Cathie Wood deemed the IPO an “amazing debut,” with her firm ARK Invest bagging hundreds of millions worth of the company’s shares.

The acquisition could point to Ark's bullish outlook on the stablecoin sector as Circle is the issuer of the world’s second-largest stablecoin by market capitalization, USD Coin USDC/USD.

Price Action:  Shares of Circle closed 29% higher at $107.70 during Friday’s regular trading session, according to data from Benzinga Pro.

Are you looking for cryptocurrency-linked stocks for your portfolio? Check out Benzinga Edge Stock Rankings to filter out the best performers on key measures such as Momentum, Growth, and Quality.

Photo Courtesy: kenary820 on Shutterstock.com

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.