Shares of Circle Internet Group (NASDAQ: CRCL) faced a pull back following the release of its latest quarterly results, despite the company reporting substantial growth in key metrics.
Over the past year, the supply of USD Coin (USDC) in circulation expanded to $61.3 billion, marking a 90% increase. Revenue, including income from reserves, rose 53% year-over-year to reach $658 million.
While USDC grew 6% quarter-to-date, Circle has previously set expectations for a 40% compound annual growth rate. This slower pace has raised concerns about whether the company can sustain its ambitious expansion targets.
Tether, the largest stablecoin issuer by market capitalization, is reportedly planning a return to US markets. The combination of regulatory shifts and heightened competition could put additional pressure on Circle’s market position.
Circle’s earnings are also heavily influenced by US interest rates. With the US Labor Department reporting a 2.7% year-over-year increase in the Consumer Price Index (CPI) for July, slightly below market expectations, speculation has grown that the Federal Reserve might cut interest rates in the near term.
In their client note, Mizuho estimated Circle’s 2027 EBITDA below consensus levels, applying a market multiple of 23x, in line with peers such as Visa, Coinbase, and Robinhood, to arrive at a price target of $84 per share.
Circle’s performance over the next several quarters will likely depend on how effectively it can address rising costs, navigate a competitive stablecoin environment, and adapt to changes in interest rate policy.
Featured image created with DALL-E, Chart from TradingView
