Dragonfly investor: Interest rate cuts would be disastrous for Circle, causing revenue and profits to shrink significantly

Dragonfly investor Omar said that a 100 basis point rate cut would reduce Circle's annualized total revenue by $618 million (-23%), gross profit by $303 million (-30%), and profit margin by 3.3 percentage points; valuation would rise from 42x EV/annualized gross profit to 60.4x (premium of about 50%). To offset the impact, USDC circulation needs to increase by $28 billion (equivalent to 44% of the current $64 billion). He stated that the rate cut is a done deal, which explains the stock sell-off of about $1.5 billion yesterday and the reason why Circle is accelerating the launch of CPN and other transaction liquidity products on the Circle chain.