Mizuho Downgrades Circle Internet Group

Mizuho Securities downgraded Circle Internet Group, the issuer of the USDC stablecoin, from Neutral to Underperform and cut its price target to $50, down from $85. The downgrade is driven by the launch of Open USD (OUSD), a dollar‑pegged stablecoin introduced on June 30 by Open Standard, a consortium‑governed entity supported by more than 140 firms including Mastercard, Stripe, Coinbase and BlackRock. Analyst Dan Dolev noted that OUSD’s “pass‑through model to distributors,” together with its scale and anticipated compliance with the GENIUS Act, could fundamentally alter Circle’s business model, which currently relies on retaining a large portion of treasury‑yield reserve income.

Under Circle’s existing float‑capture model, it collects 100 % of reserve income and retains roughly 38 % after revenue‑sharing with distribution partners such as Coinbase and Binance. OUSD, by contrast, retains only a small management fee and routes nearly all reserve income to its distribution partners, effectively inverting Circle’s approach.

Mizuho also highlighted Circle’s revenue‑sharing agreement with Coinbase, its largest distributor, which is due for renewal in August, and suggested that Coinbase’s possible endorsement of OUSD could increase its leverage in the renegotiation.

Reflecting these concerns, Mizuho raised its assumption for Circle’s distribution and transaction costs for fiscal 2027 to 73 % of revenue, up from 64 %, and reduced its adjusted EBITDA estimate for 2027 to $699 million, down from $1.093 billion. This revised EBITDA figure is about 25 % below the Wall Street consensus of $941 million. Although Mizuho now expects higher interest rates in 2027 than previously modelled, it stated that the increase is insufficient to offset potential pricing compression, which could pressure medium‑term profitability.

For valuation, the analyst projected average USDC circulation to reach approximately $126 billion in 2027, generating reserve income of about $5.058 billion. While Circle’s peer group—Visa, Mastercard, Coinbase and Robinhood—trades at an average multiple of roughly 20 × EBITDA, Mizuho applied a multiple of about 17 ×, representing a three‑turn discount to peers, citing slowing market‑cap growth of USDC and rising stablecoin competition.