On the eve of the Circle financial report, Wall Street has a huge divergence in the valuation of CRCL

Author: Azuma, Odaily Planet Daily

On August 5, Beijing time, the stablecoin issuer Circle (CRCL) will announce its latest quarterly financial report before the U.S. stock market opens. However, just before the release of this quarter's financial report, there has already been a clear divergence on Wall Street regarding Circle's future value.

On August 3, Morgan Stanley (hereinafter referred to as "Morgans") downgraded Circle's rating from "Equal Weight" to "Underweight," and significantly lowered the target price from $106 to $38.

At the same time, TD Cowen initiated coverage of Circle with a "Buy" rating and set a target price of $82.

The two institutions have given completely different rating judgments, reflecting a core divergence on how to define Circle at present—whether to continue viewing it as a stablecoin issuer reliant on the growth of USDC or as a technology company evolving into a digital financial infrastructure platform.

Institutional Divergence: Morgans is Bearish on USDC Growth, TD Cowen Bets on Platform Transformation

The analyst from Morgans who gave the "Underweight" rating is James Faucette. On TipRanks, Faucette has a four-star rating (out of five), and he is generally regarded as a sell-side analyst well above average. Although Faucette's average return rate over the past two years has only been 3.1%, his judgment win rate is as high as 60%.

Faucette's bearish logic centers around Circle's current revenue model.

In his view, the market may have overestimated the future growth potential of USDC, and the speed of expanding stablecoin application scenarios is also lower than previously expected—since the third quarter of 2025, the circulation of USDC has not actually increased, and currently, apart from remittances and card consumption related to stablecoins, there have been no large-scale new application scenarios for USDC.

This means that Circle's most core revenue source, "reserve income," may face growth pressure. Currently, Circle's main revenue heavily relies on allocating USDC reserve assets to cash and short-term U.S. Treasury securities to earn interest income, so the growth of USDC circulation is often seen as an important driving force for the company's profit expansion.

Faucette believes that if the growth of USDC slows down, Circle's future revenue structure may gradually shift towards lower-margin transaction income. Based on this judgment, he expects Circle's future profit performance may fall below market expectations and believes the current valuation already reflects overly high growth expectations.

Another analyst holding a similar bearish view to Faucette is Dan Dolev from Mizuho Securities. Dolev has a rating of 4.5 stars on TipRanks, higher than Faucette's, and last Friday, he gave 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, but on TipRanks, Bergin's personal track record rating is only half a star, with a historical average return rate of -3.4%, and a judgment win rate of only 43%…

Bergin believes that the market may currently underestimate Circle's potential to transform from a stablecoin issuer to a broader financial infrastructure platform.

In his analytical framework, Circle's future value does not only depend on the circulation scale of USDC, but on whether it can establish a more complete financial service system around stablecoins, including payment, fund management, real-world asset (RWA) tokenization, developer services, and blockchain infrastructure.

Bergin expects that by 2030, the circulation of USDC is likely to maintain an annual compound growth rate of about 31%, while the growth rate of fee-based income will significantly exceed that of traditional reserve income. Additionally, the Arc network that Circle is promoting will also be a potential growth hotspot, likely further expanding Circle's influence in the digital financial infrastructure field.

Another Key Variable Recently: Progress of the CLARITY Act

In addition to the company's own 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 further development of the stablecoin industry—if the bill is ultimately passed, the issuance, trading, and related financial services of stablecoins will receive a clearer regulatory framework, which is expected to reduce compliance uncertainties for institutions adopting stablecoins.

However, at present, the progress of the CLARITY Act does not seem smooth. With only a few working days left before the Senate's summer recess, market expectations for its short-term advancement have significantly decreased.

Odaily Note: Please refer to "Just One Step Away, What’s Holding Up the Clarity Act?" and "What Happens If the CLARITY Act Ultimately Fails?"

If the advancement of the bill continues to be delayed, the market may reassess the commercialization speed of the stablecoin industry and the growth expectations for Circle. Therefore, before the financial report is released, the uncertainty surrounding the CLARITY Act has also become one of the important factors suppressing CRCL market sentiment.

Financial Report Approaches, Market Awaits Circle's Answers

Ultimately, the divergence on Wall Street regarding Circle does not stem from short-term performance, but from different judgments about the company's future positioning. Bears are concerned about whether Circle's traditional reserve income model can still support the current valuation after the slowdown in USDC growth; bulls are betting that Circle can gradually grow into a digital financial infrastructure platform based on its stablecoin business.

Therefore, in this financial report, the market will not only focus on revenue and profit performance but will also closely observe reserve income (especially the distribution agreements with Coinbase and other partners) as well as payment and RWA business progress.

After the financial report is released tomorrow night, Odaily Planet Daily will also provide timely interpretations of the financial report for everyone.