Original | Odaily Planet Daily (@OdailyChina)
Author | Azuma (@azuma_eth)
On August 5th, Beijing time, stablecoin issuer Circle (CRCL) is set to release its new quarterly earnings report before the US stock market opens. However, just on the eve of this report, Wall Street has already shown significant divergence regarding Circle's future value.
On August 3rd, Morgan Stanley (hereafter referred to as "MS") downgraded Circle's rating from "Equal Weight" to "Underweight" and significantly lowered its target price from $106 to $38.
Meanwhile, TD Cowen initiated coverage of Circle with a "Buy" rating, setting a target price of $82.
The two institutions presented entirely different rating judgments. The core divergence reflected in their views lies in how to define Circle at present — should it continue to be viewed as a stablecoin issuer reliant on USDC circulation growth, or as a technology company evolving into a digital financial infrastructure platform?
Institutional Divergence: Morgan Stanley Bearish on USDC Growth, TD Cowen Bets on Platform Transition
The Morgan Stanley analyst giving the "Underweight" rating is James Faucette. On TipRanks, Faucette holds a four-star rating (out of five) and is widely considered a sell-side analyst significantly above average. Although Faucette's average return rate over the past two years was only 3.1%, his success rate in calls reached 60%.
Faucette's bearish logic primarily revolves around Circle's current revenue model.
In his view, the market may be overestimating USDC's future growth potential, and the expansion speed of stablecoin use cases is also slower than previously expected — since Q3 2025, the circulation scale of USDC has not actually shown growth. Moreover, aside from remittances and stablecoin-related card consumption, USDC has not yet seen large-scale new application scenarios.
This means that Circle's current core revenue source, "reserve income," may face growth pressure. Currently, Circle's primary income heavily relies on allocating USDC reserve assets to cash, short-term U.S. Treasury bonds, and other assets to earn interest income. Therefore, the growth in USDC circulation is often seen as a key driver for the company's profit expansion.
Faucette believes that if USDC scale growth slows, Circle's future revenue structure may gradually tilt towards transaction revenue with lower profit margins. Based on this judgment, he expects Circle's future earnings performance may fall short of market expectations and believes the current valuation already reflects overly high growth expectations.
An analyst sharing a similar bearish view is Dan Dolev from Mizuho Securities. Dolev holds a 4.5-star rating on TipRanks, higher than Faucette's. Last Friday, this analyst assigned Circle a "Hold" rating but lowered the target price from $50 to $45.
On the TD Cowen side, the analyst giving the "Buy" rating is Bryan C. Bergin. However, on TipRanks, Bergin's personal track record rating is only half a star, with a historical average return rate of -3.4% and a success rate of only 43%...
Bergin believes the market may currently be underestimating Circle's potential to transition from a stablecoin issuer to a broader financial infrastructure platform.
Within his analytical framework, Circle's future value does not solely depend on USDC circulation scale, but rather on its ability to build a more comprehensive financial service ecosystem around stablecoins, including businesses such as payments, fund management, real-world asset (RWA) tokenization, developer services, and blockchain infrastructure.
Bergin estimates that by 2030, USDC circulation is expected to maintain a compound annual growth rate of about 31%. Simultaneously, fee-based revenue is projected to grow significantly faster than traditional reserve income. Furthermore, the Arc network that Circle is advancing could be a potential growth catalyst, potentially further expanding Circle's influence in the digital financial infrastructure field.
Another Recent Key Variable: CLARITY Act Progress
Beyond the company's business model, regulatory progress is also an important factor currently affecting market expectations for Circle.
Previously, the market generally viewed the CLARITY Act as a key catalyst for the further development of the stablecoin industry — if the bill ultimately becomes law, stablecoin issuance, trading, and related financial services would obtain a clearer regulatory framework, potentially reducing compliance uncertainty for institutional adoption of stablecoins.
However, currently, the progress of the CLARITY Act does not appear smooth. With only a few working days left before the Senate's summer recess, market expectations for its ability to advance in the short term have noticeably declined.
- Odaily Note: Refer to "Just One Step Away, Where Is the Clarity Act Stuck?" and "What If the CLARITY Act Ultimately Fails to Pass?"
If the advancement of this bill continues to be delayed, the market may need to reassess the commercialization pace of the stablecoin industry and Circle's growth expectations. Therefore, before the earnings release, the uncertainty surrounding the CLARITY Act has also become a factor suppressing market sentiment towards CRCL.
Earnings Report Approaching, Market Awaits Circle's Answers
Ultimately, Wall Street's divergence on Circle stems not from short-term performance but from differing judgments about the company's future positioning. Bears focus on whether Circle's traditional reserve income model can still support its current valuation if USDC growth slows. Bulls, on the other hand, are betting that Circle can leverage its stablecoin business to gradually grow into a digital financial infrastructure platform.
Therefore, in this earnings report, besides focusing on revenue and profit performance, the market will also closely observe progress in reserve income (especially distribution agreements with Coinbase and other partners), payments, RWA, and other businesses.
After tomorrow night's earnings release, Odaily Planet Daily will promptly bring you an earnings report analysis.
