Circle Internet Group (CRCL), the company behind the USDC stablecoin, saw its stock drop nearly 6% in after-hours trading on August 12. The decline came after Circle announced plans to sell 10 million new shares. This news followed the company’s first earnings report since going public in June, which showed a 53% increase in revenue on strong stablecoin growth. USDC circulation jumped 90% year-over-year to $61.3 billion in Q2. Meanwhile, Circle reported a net loss of $482.1 million, or $4.48 per share, compared to a break-even result a year ago.
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Despite the strong Q2 top-line growth, US Tiger Securities analyst Bo Pei lowered his price target for Circle from $200 to $180, while keeping a Hold rating on the stock.
Why Is Analyst Cautious About CRCL?
Pei recognizes that Circle is well positioned to grow in the regulated stablecoin market. The upcoming launch of Circle’s new blockchain product, Arc, is also a positive step. However, several concerns have led the analyst to stay cautious for now.
First, profit margins remain under pressure. Even though the amount of Circle’s USDC stablecoin in the US is growing, the margins on their reserve digital currency are getting worse. The forecast shows these margins might shrink even more in the second half of 2025, which could hurt profits.
Second, operating costs are rising faster than expected. This increase in expenses could delay Circle’s ability to improve its profit margins.
Third, about 96% of Circle’s revenue still comes from reserve income. This heavy reliance makes the company vulnerable to changes in Federal Reserve interest rates. With inflation cooling and political pressure on rates to come down, Circle’s revenue could face risks.
Finally, the stock’s valuation looks high. Circle shares are trading at more than 60 times the company’s expected earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2026. This means the market is betting on strong growth, but the risks could make the valuation too steep.
Despite these issues, Pei believes the stock could still rise if the crypto market improves or if industry conditions improve favorably.
What Is the Target Price of CRCL Stock?
Currently, Wall Street is cautious about Circle Internet stock, with a Hold consensus rating based on five Buys, six Holds, and four Sell recommendations. The average CRCL stock price target of $180.08 indicates a possible upside of 10.34% from current levels.
