Morgan Stanley downgraded stablecoin issuer Circle (NYSE: CRCL) to Underweight on Aug. 3 and cut its price target by nearly 64% to $38 from $106, delivering Wall Street's most bearish call on
Morgan Stanley downgraded stablecoin issuer Circle (NYSE: CRCL) to Underweight on Aug. 3 and cut its price target by nearly 64% to $38 from $106, delivering Wall Street's most bearish call on the stock just two days before the company reports second-quarter earnings.
The investment bank cited slowing USDC adoption, weaker reserve income prospects and a richer valuation as reasons for the downgrade, adding to a string of increasingly cautious analyst calls ahead of Circle's Aug. 5 earnings report.
The downgrade sent Circle shares lower, extending a recent sell-off that has come despite continued regulatory progress and expansion efforts by the USDC issuer.
Related: Update: Coldcard hack just grew to $89M, call your friends
The first major sign of caution came on July 30, when Bernstein cut its price target on Circle by 25%, lowering it from $190 to $140 while maintaining an Outperform rating.
The brokerage said USDC supply ended the second quarter at about $73 billion, down from $77 billion in the first quarter, prompting it to reduce its long-term USDC supply forecast from $290 billion to $170 billion by 2028.
Bernstein said slower stablecoin growth would weigh on Circle's reserve income, though it still expects payments, financial services and tokenization to drive long-term adoption.
On July 31, Circle announced it had received a limited-purpose trust charter from the New York Department of Financial Services, allowing its Circle New York Trust to oversee USDC reserves and provide institutional digital asset custody services.
Despite the regulatory milestone, Circle shares fell nearly 7%, suggesting investors were more focused on growth expectations ahead of earnings than regulatory progress.
Morgan Stanley's downgrade on Aug. 3 went further than previous analyst revisions, arguing that slowing USDC adoption and pressure on reserve income justified a substantially lower valuation.
Not all analysts have turned bearish.
TD Cowen recently initiated coverage with a Buy rating and an $82 price target, underscoring that Wall Street remains divided on Circle's outlook.
In the first quarter of 2026, Circle reported earnings of $0.21 per share, beating the $0.19 estimate, while revenue of $694.13 million missed the $714.70 million forecast. For the second quarter, analysts expect earnings of about $0.16 per share on revenue of roughly $713.70 million.
At the time of writing, Circle shares traded at $58.78, down 6.1% on the day.
Related: Another AI model breached security tests as Trump weighs new controls
