Mizuho Downgrades Circle to Underperform on Threat From New Stablecoin

Mizuho Securities has downgraded Circle Internet Group (CRCL) to Underperform from Neutral, citing a significant competitive threat from the recently launched Open USD stablecoin. The firm also sharply reduced its price target on the USDC issuer to $50 from $85, anticipating pressure on Circle's primary revenue model.

A New Rival's Business Model

The downgrade is primarily driven by the June 30 launch of Open USD (OUSD), a dollar-pegged stablecoin from a consortium including Mastercard, Stripe, Coinbase, and BlackRock. According to a Mizuho note, OUSD's "pass-through model" poses a direct challenge to Circle's current structure.

Circle operates on a "float-capture model," collecting all income from its reserves and retaining a blended 38% after sharing revenue with partners. In contrast, OUSD plans to route nearly all reserve income to its distribution partners, keeping only a small management fee. Analyst Dan Dolev wrote that this approach "could fundamentally alter CRCL’s business model."

Revised Financial Outlook

The potential for increased competition led Mizuho to revise its financial projections for Circle. The firm now assumes Circle's distribution and transaction costs will rise to 73% of revenue in fiscal 2027, up from a previous estimate of 64%.

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This change prompted a significant cut to Mizuho's 2027 adjusted EBITDA forecast for Circle, lowering it to $699 million from $1.093 billion. The new estimate is approximately 25% below the Wall Street consensus of $941 million, according to the note.

The report also highlighted Circle's upcoming revenue-sharing renewal with Coinbase, its largest distributor and a backer of OUSD. Mizuho suggested Coinbase's involvement with the rival stablecoin "could boost its leverage" in those negotiations.

Valuation Pressure

In establishing its new $50 price target, Mizuho applied a valuation multiple of approximately 17x EBITDA. This represents a discount to Circle's peer group—which includes Visa, Mastercard, Coinbase, and Robinhood—that trades at an average of roughly 20x EBITDA.

The analyst attributed the lower multiple to USDC's slowing market capitalization growth and the increasing competitive landscape in the stablecoin market.