tl;dr
Shares of stablecoin issuer Circle (CRCL) dropped 8.23% to $198.31 following a downgrade from “neutral” to “sell” by Compass Point analysts, continuing a 17.47% decline since June 23. Compass Point set a price target of $130, implying a further 34% drop. The downgrade follows the U.S. passing the GE...
Shares of stablecoin issuer Circle (CRCL) fell sharply by 8.23% on Tuesday to $198.31 following a rating downgrade from “neutral” to “sell” by Compass Point analysts. This drop continues a 17.47% decline over the past month from its peak of $298.99 on June 23. Compass Point now sets a price target of $130 for CRCL, implying a further 34% decrease from the current price.
The downgrade comes in the wake of the U.S. government signing the GENIUS Act into law on July 18, America's first major crypto legislation establishing a regulatory framework for stablecoins, which are tokens pegged to fiat currencies like the U.S. Dollar. Despite recognizing Circle’s stablecoin USDC’s potential significance in the global financial system, Compass Point analysts caution that increased competition from banks and fintech companies launching their own stablecoins could pressure Circle’s market share starting in the second half of 2025.
Notably, major financial institutions such as Charles Schwab, Citi Bank, and JP Morgan have signaled interest in developing competing stablecoins, often via white-labeling or mergers and acquisitions, leveraging their broader distribution networks, particularly in payments. Additional risks cited by Compass Point include potential Federal rate cuts, declining retail investor interest, and uncertainties around new revenue-sharing agreements.
The analysts’ $130 price target is based on a valuation model applying a 25x multiple on their 2030 EBITDA forecast, discounted at 15% annually. They emphasize that Circle’s current trading multiple—106x the predicted 2026 EBITDA—suggests investor expectations are not tied to near-term earnings. Circle’s public listing in early June was notable for raising $1.1 billion at $31 per share, with its stock price almost quadrupling on the first day and outperforming IPOs from Meta, Airbnb, and Robinhood.