After 10 days of being listed and a 6-fold increase, are there still analysts bullish on Circle?

The crazy surge "simply cannot be stopped"! "The first stock of stablecoins" Circle soared over 20% overnight, with a cumulative increase of over 650% since its IPO. Despite the astonishing cumulative increase, some analysts have still given the stock a buy rating for the first time.

On Friday (June 20), "the first stock of stablecoins" Circle continued its crazy surge, rising over 20% to $240.28. This marked the second consecutive trading day of significant gains following the U.S. Senate's passage of the GENIUS Act.

According to a previous article mentioned by Wallstreetcn, on Wednesday, the U.S. Senate passed the GENIUS Act with a vote of 68-30, establishing a federal regulatory framework for dollar-backed stablecoins, requiring issuers to hold safe assets such as government bonds as reserves. Following the announcement, Circle surged nearly 30% that day.

Since its IPO on June 5, Circle's stock price has increased by over 675%, soaring from the IPO price of $31 to Friday's closing price of $240.28. Despite the impressive increase, Seaport Research Partners analyst Jeff Cantwell has given the stock a buy rating for the first time, with a target price of $235.

Cantwell expects that with an improved regulatory environment and increased acceptance of cryptocurrencies, the stablecoin market will experience explosive growth. He believes that Circle, as a "top crypto disruptor," is likely to reap significant benefits from this growth, achieving an annual revenue growth of 25%-30%.

However, Circle's business model is highly dependent on interest rate levels, with every 25 basis points cut in rates expected to reduce its 2026 EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) by about $100 million. Additionally, the company needs to pay distribution fees to partners like Coinbase, which also puts pressure on profit margins.

Stablecoin Market Size Expected to Double

Seaport Research Partners predicts that the total market value of stablecoins will grow from the current $260 billion to $500 billion by the end of 2026, and could potentially reach $2 trillion in the long term. This growth is primarily driven by the adoption of stablecoins in areas such as DeFi, cross-border payments, and e-commerce.

The USDC stablecoin issued by Circle currently holds a 29% market share, second only to Tether's USDT. As more businesses incorporate stablecoins into their cash management or payment processes, the use cases for USDC will significantly expand.

It is reported that Circle is building financial infrastructure in an attempt to attract more businesses and customers into the cryptocurrency space. Its Circle Payments Network product helps financial institutions conduct real-time cross-border payments, showing disruptive potential in areas such as vendor payments, remittances, and payroll disbursements

Business Model Faces Interest Rate Risk Challenges

Circle's revenue primarily comes from interest income on reserve assets, which accounted for 95%-99% of total revenue over the past three fiscal years. Therefore, the growth of USDC's scale is its core revenue driver, but this model also makes the company vulnerable to interest rate fluctuations.

Sean Farrell, Head of Digital Asset Strategy at Fundstrat, pointed out that a 25 basis point rate cut would reduce Circle's expected EBITDA by about $100 million in 2026, requiring a 10% increase in stablecoin adoption to offset this impact.

Additionally, Circle needs to pay USDC distribution fees to partners like Coinbase, which further compresses profit margins.

Notably, Farrell set a target price of $59 the day after the IPO, believing that "in more future scenarios, there will be pressure on the current valuation."

Market Seeks Real Value Support

For stock market investors, Circle is one of the few pure stablecoin concept stocks. Tether is not publicly listed, Coinbase is more of a partner than a direct competitor, and companies like PayPal and Block have broader business scopes.

Circle's sky-high valuation has put Wall Street in a dilemma over whether its 650% increase is "real." Currently, the stock price performance is mainly driven by market optimism about the stablecoin industry's prospects, rather than significant improvements in fundamentals.

Cantwell believes that the current cryptocurrency and stablecoin market is similar to the fintech industry in 2016—immature but with huge opportunities. Against the backdrop of an improving regulatory environment, Circle is still in the early stages of development and has long-term growth potential