"Circle Faces Continued Margin Pressure from Increasing Distribution Costs…Potential for Stock Price Decline"
Summary
- Mizuho Securities reported that Circle's profitability continued to deteriorate in the second quarter, with sustained margin pressure.
- It was noted that distribution costs are increasing due to expanded USDC distribution partnerships.
- There is a high likelihood of a stock price decline due to worsening profitability, and the target price was previously set at $85.
There is an outlook that the stock price of Circle, the issuer of the stablecoin USDC, is likely to decline.
According to The Block on the 1st (local time), Mizuho Securities reported that "Circle earned approximately $625 million in total interest income from operating USDC reserves during the second quarter, and is estimated to have paid $332.5 million of that to Coinbase."
It further stated, "As Circle expands its distribution partnerships with other platforms such as Binance, payments to other partners are also increasing, which could further intensify margin pressure," thereby raising the possibility of a stock price decline due to worsening profitability.
Meanwhile, Circle's current stock price is about $170 per share, and Mizuho had previously set a target price of $85 for Circle earlier this month.
Suehyeon Lee
shlee@bloomingbit.ioI'm reporter Suehyeon Lee, your Web3 Moderator.
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