Mizuho warns: Circle faces medium-term pressures from slowing USDC growth and rising costs, with stock prices potentially falling to $84.

Despite Circle Internet Group (NASDAQ: CRCL) delivering impressive revenue and USDC circulating supply growth data in the latest quarter, Mizuho Securities analysts warned that the company is facing "mid-term risks" — including USDC growth falling short of expectations, rising distribution costs, and potential interest rate cut pressures. Mizuho set a benchmark target price of $84 for CRCL, which could even fall to $40 in a pessimistic scenario, well below the current stock price of around $153.

Quarterly data shines but triggers stock price adjustment

Circle disclosed in its latest financial report that the Circulating Supply of USDC rose by 90% year-on-year to USD 6.13 billion, with total revenue and reserve revenue increasing by 53% year-on-year to USD 658 million. However, after the release of the financial report, the stock price fell more than 6% the next day, closing at USD 153.16.

Analysts at RBS pointed out that although the data appears positive on the surface, the market is skeptical about the sustainability of future growth, especially as the quarterly growth rate of USDC is only 6%, far below the company's long-term target of a 40% compound annual growth rate.

Distribution Cost Erodes Intrerest Rate

The Mizuho report shows that Circle's distribution costs as a percentage of the reserve pool have increased from 39% in 2022 to 61% in 2024, and further climbed to 64% in the second quarter.

Analysts warn that with the implementation of the GENIUS Act, competition in the stablecoin market is intensifying, as major competitors like Tether plan to return to the U.S. market. Circle's distribution cost pressures may continue to rise, further squeezing profit margins.

Interest Rate Changes Constitute Additional Risks

The US July CPI year-on-year increase rate is 2.7%, lower than market expectations, raising market expectations for the Federal Reserve to cut interest rates.

Mizuho pointed out that while this is beneficial for the overall economy, it is a negative factor for Circle, which relies on high-interest rate returns. The reduction in interest rates will directly affect the company's ability to generate returns on its reserve assets, thereby dragging down profitability.

Target Price and Scenario Analysis

Mizuho has set a benchmark target price of $84 for CRCL based on an EBITDA valuation multiple of approximately 23 times compared to peers such as Visa and Robinhood.

In a pessimistic scenario, assuming the annual compound growth rate of USDC is only 15%, with a market capitalization reaching 72 billion USD, and the interest rate declines, stock prices may fall to 40 USD.

It is worth noting that Bernstein analysts maintain an optimistic target price of $230, highlighting the market's divergence on Circle's prospects.

Conclusion

Since Circle went public in June, its stock price has surged over 200%, but Mizuho's warning indicates that the slowdown in USDC rise, increasing distribution costs, and interest rate risks may put pressure on the company's valuation in the medium term. As competition in the stablecoin market intensifies, investors need to closely monitor Circle's ability to balance growth and cost control. For more real-time market data and in-depth analysis, please follow the official Gate platform.