Circle Internet Group (NYSE:CRCL) beat Q2 earnings estimates Wednesday but is down 1.5% as Mizuho flagged sequential USDC decline and margin pressure beneath the headline numbers.
What The Numbers Actually Showed?
Circle reported revenue and reserve income of $701 million for Q2, up 7% year-over-year but slightly below Wall Street’s $717 million expectation, according to the filing.
Earnings per share came in at $0.18, beating the $0.17 consensus estimate. Net income hit $48 million, a $530 million swing from last year’s loss, driven largely by the absence of one-time IPO-linked stock compensation costs.
Meanwhile, USDC in circulation reached $73.3 billion, up 19% year-over-year, while on-chain transaction volume surged 151% to $14.8 trillion.
Moreover, adjusted EBITDA rose 8% to $143 million.
Why The Stock Is Still Selling Off?
Mizuho maintained its Underperform rating and $45 price target despite the earnings beat, arguing operating trends remain concerning.
USDC fell from $77 billion in Q1 to $73.3 billion in Q2, a sequential decline Mizuho flagged alongside on-chain transaction volumes dropping 31% from the prior quarter and adjusted EBITDA margin falling 329 basis points year-over-year.
The reserve return rate also dropped 66 basis points to 3.5% as the rate environment pressured the yield Circle earns on the cash and Treasuries backing USDC.
Those concerns compound the Morgan Stanley downgrade from Monday, which cut its price target to $38 from $106, citing slower USDC growth, rising competition from tokenized money market funds, and the growing cost of defending USDC distribution against Open USD, as Benzinga reported.
What Circle Is Building Beyond The Numbers?
Circle announced Arc Mainnet launches September 16, with founding validators including BlackRock (NYSE:BLK), DTCC, Galaxy, Mastercard (NYSE:MA), Standard Chartered, and Visa (NYSE:V).
BlackRock is expected to deploy its BUIDL fund on Arc while DTCC plans to tokenize DTC-custodied assets on the network.
The company also received its federal trust bank charter from the OCC, making it one of the first stablecoin issuers to operate under federal banking oversight.
Circle raised full-year guidance for other revenue to $310 to $330 million, up from $150 to $170 million.
Where Does CRCL Stand Technically?
CRCL trades 3.9% below its 20-day SMA and 18% below its 50-day SMA, with the death cross formed in June keeping the longer-term structure bearish.
MACD sits above its signal line pointing to easing selling pressure, but the stock needs to reclaim key moving averages to change the picture.
Key levels for CRCL:
- $73 — 50-day SMA zone where rebounds have stalled
- $58.50 — nearby support floor
- $49.90 — 52-week low, next major downside reference
Image: Shutterstock
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