TLDR: Mizuho downgraded Circle to Underperform, cutting its price target from $85 to $50. OpenUSD’s revenue-sharing model threatens Circle’s core USDC business economics. Mizuho slashed 2027
Mizuho, a major Japanese investment bank, has downgraded Circle from Neutral to Underperform. The bank also slashed its price target on the stablecoin issuer sharply.
Circle’s target price dropped from $85 to just $50 per share. Analysts cited emerging competitive threats that could weigh heavily on future earnings.
The downgrade stems largely from concerns over OpenUSD, a newly launched stablecoin. Analysts led by Dan Dolev outlined the threat in a Tuesday research note.
The team warned that OpenUSD “could fundamentally alter CRCL’s business model, which relies on retaining a large portion of the treasury yield to drive revenues.” That assessment forms the basis for Mizuho’s sharply lowered outlook.
OpenUSD was unveiled on June 30 by the Open Standard consortium. This group already counts more than 140 partners across major financial sectors.
Notable backers include Mastercard, Stripe, Coinbase, and BlackRock among others. Their involvement gives OpenUSD substantial credibility and reach within the industry.
Circle’s existing USDC model captures most reserve income before sharing with partners. OpenUSD instead charges a small fee and passes most income along.
This structural difference could force Circle to share more revenue eventually. Distribution partners may push for larger cuts as OpenUSD gains traction.
The timing is notable given Circle’s upcoming negotiation with Coinbase in August. Coinbase remains Circle’s largest and most important distribution partner currently.
Coinbase has already shown support for the OpenUSD initiative publicly. Mizuho’s note suggests this backing could strengthen Coinbase’s position in talks.
Mizuho adjusted several key financial estimates to reflect these emerging pressures. The bank raised its 2027 distribution and transaction expense ratio forecast.
That figure now sits at 73%, up notably from a prior 64% estimate. Higher costs directly reduce the amount of profit Circle can retain.
Adjusted EBITDA projections fell as a result of these revised assumptions. Mizuho now forecasts $699 million, down from $1.09 billion previously.
This updated figure lands roughly 25% below current Wall Street consensus estimates. Consensus estimates currently sit near $941 million for the same period.
Mizuho noted that higher interest rates alone will not offset the damage. Even improved reserve yields cannot fully counter mounting distribution cost pressures.
Circle shares reacted to the news, slipping about 0.6% in trading. Shares were last seen near $62.63 at the time of publication.
Beyond OpenUSD, Circle faces additional headwinds from other market participants. JPMorgan flagged separate concerns tied to Circle’s partnership with Hyperliquid.
That bank described the arrangement as creating a prisoner’s dilemma dynamic. Together, these reports paint a more cautious picture for Circle’s near-term outlook.
The broader stablecoin sector has also cooled somewhat in recent months. USDC’s circulating supply dropped to roughly $73 billion from March highs.
Total stablecoin market value has shrunk close to $10 billion since May. Softer trading volumes and rising competition both contributed to that decline.
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