Circle shares fall nearly 4% after Morgan Stanley downgrade

Circle Internet took a beating on Monday after Morgan Stanley downgraded the stablecoin issuer to underweight from equal-weight, cutting its price target from $106 to a strikingly low $38. Shares dropped nearly 4% on the news, extending what has already been a rough year for the USDC operator. The stock is now down approximately 30% year-to-date. For a company that priced its IPO at $31 just over a year ago and watched shares pop to around $69 on opening day, the trajectory has been humbling. The case against Circle Morgan Stanley analyst James Faucette laid out a bearish thesis that essentially boils down to this: Circle’s core business is getting squeezed from multiple directions at once. The bank cut its USDC supply forecasts by roughly 33% for 2027 and 44% for 2028. Morgan Stanley thinks the amount of USDC circulating in the market is going to shrink meaningfully over the next two years, and that’s a massive problem for a company whose revenue engine runs on the interest earned from reserves backing those tokens. Morgan Stanley’s new GAAP EPS projections for 2028 sit about 20% below where the rest of Wall Street’s consensus currently lands. Faucette pointed to several structura...