Circle employees lost about $3 billion due to the traditional IPO process, as CRCL stock-magazine made its mega debut, selling 14.4 million shares.
Circle ( CRCL ) stock gained an additional 20% on Friday, and is already up 700% since its IPO earlier this month.
Despite these huge gains, billionaire investor Chamath Palihapitia noted that the stablecoins firm's employees lost nearly $3 billion, as the company had to go the traditional IPO route instead of a SPAC merger.
This is because the company's employees have to sell 14.4 million shares from their holdings to go ahead with the IPO.
Constituency employees are missing out on $3 billion in wealth.
With CRCL stock rallying 700% since its IPO, USDC stablecoin issuer Circle has reached close to $50 billion with 15 days to its IPO, at a valuation of less than $8 billion.
The massive rally comes on the back of the GENIUS Stablecoin Act, which heads to the US House for final approval.
However, Chamath Palihapitia said Circle employees lost a large portion of the traditional IPO route, questioning the traditional public listing process, and comparing it to a SPAC merger.
In his recent post on the X platform, Palipitiya said that throughout the IPO process, employees had to shed a total of 14.4 million shares at $31 per share, valuing them at $450 million.
However, after the stablecoin firm reached $3.456 billion upon its public listing debut, it lost nearly $3 billion in the process. This is why he prefers SPACs over traditional IPOs, Palihapitya said.
The billionaire added that cost is passed on to intermediaries in SPACs and direct listings, but at least it's disclosed up front and negotiable. In traditional IPOs, banks use obfuscation to reward their best customers with free stock.
“In this case, it was a $3B gift from the employees and investors of Circle to people they don’t know, will never know and have nothing to do with their journey,” wrote Palihapitiya.
Justin Sun's Tron makes a smart move.
Earlier this week, Tron founder Justin Sun announced his decision to go public through a SPAC merger with SRM Entertainment, bypassing the entire IPO process.
Nasdaq-listed SRM Entertainment will merge with Tron Group in a deal that will see the latter's corporate rebranding as "Tron Inc."
Dominari Securities, a boutique investment bank with ties to former US President Donald Trump, will handle the reverse merger, the sources said. After going public, the newly rebranded entity plans to launch Tron Reserve.
