Circle shares fall 6% after Morgan Stanley downgrade

Circle shares fell 6% after Morgan Stanley downgraded the stock and cut its price target to $38, citing weak USDC growth, lower reserve income, and rising competition from new stablecoin models.

Circle Internet Group's shares dropped approximately 6% following a downgrade by Morgan Stanley, which shifted its rating from Equalweight to Underweight and slashed the price target from $106 to $38. The downgrade was attributed to slower-than-expected growth of Circle's USDC stablecoin, declining reserve income, and a transition toward lower-margin transaction revenue. Morgan Stanley also cut its USDC circulation forecasts by 33% for 2027 and 44% for 2028, and reduced GAAP earnings-per-share estimates below consensus. The bank highlighted increasing competition from tokenized cash products and emerging stablecoin models like Open USD as further risks to Circle's earnings outlook. Despite these concerns, TD Cowen initiated coverage with a Buy rating and an $82 price target, though most analysts remain cautious, maintaining Hold or Sell recommendations. Investor sentiment is pressured by regulatory uncertainty and questions about the real-world adoption of stablecoin payments.