In brief
- Analysts at Compass Point downgraded shares of Circle (CRCL) to a “sell” rating.
- The analysts cited increased stablecoin competition, Fed rate cuts, and waning retail participation as potential negative catalysts.
- Shares closed down more than 8% on Tuesday, now off around 34% from its all-time high of $298.99.
Shares of stablecoin issuer Circle (CRCL) tumbled 8.23% on Tuesday to $198.31, after receiving a downgrade from “neutral” to a “sell” rating from analysts at investment firm Compass Point on Monday.
The decline extends the stock’s 17.47% fall over the past month from its all-time high of $298.99 on June 23, based on Yahoo Finance data.
The firm now sets a price target of $130 for CRCL, a further 34% fall from its current trading price.
“While we expected CRCL to rally into stablecoin legislation, crypto investors typically ‘sell the news’ after highly anticipated events,” analysts at Compass Point wrote in their downgrade memo. “As such, we expect CRCL to retrace some of its recent rally after the GENIUS act was signed into law on 7/18.”
The GENIUS Act marks America’s first major piece of crypto legislation, creating a clear framework for the issuance and trading of stablecoins, or tokens pegged to the value of fiat currencies like that of the U.S. Dollar.
While Compass Point analysts believe Circle’s stablecoin–USDC–can play a pivotal role in the financial system moving forward, it believes that items like increased stablecoin competition from banks and fintech companies might be a detriment in the second half of 2025.
“We expect more mainstream fintechs and banks to announce competing stablecoins in 2H25, primarily through white-labeling and/or M&A,” the Compass Point analysts said. “Many mainstream businesses have wider distribution networks than CRCL, particularly within payments.”
Among others, Charles Schwab’s CEO hinted at the firm’s interest in its own stablecoin last week, following similar considerations from Citi Bank and JP Morgan.
Furthermore, the analysts highlighted Federal rate cuts, waning retail interest, and the details of new revenue share agreements as potential negative catalysts for the CRCL share price.
“We reach our $130 price target (PT) by applying a 25x multiple on our 2030E EBITDA forecast while applying a 15% annual discount rate. With CRCL trading at 106x our 2026E EBITDA forecast, we don’t believe investors are valuing the stock on near-term earnings,” the analysts said.
Circle completed its IPO in early June, raising $1.1 billion at an offering of $31 per share. The stock nearly quadrupled in a single day of trading, outperforming the public debuts of other notable companies, including Meta, Airbnb, and Robinhood in the process.
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