Morgan Stanley downgraded Circle stock rating to underweight, with a target price of $38

On August 3rd, Morgan Stanley downgraded its Circle stock rating from holding to underweight and lowered its target price from $106 to $38. Morgan Stanley analyst James Faucette stated that the reasons for the downgrade include the contraction of USDC liquidity and the shift of business towards lower margin trading revenue models. The report has lowered Circle's USDC size forecast by approximately 33% and 44% respectively, and expects GAAP earnings per share to be about 3% and 20% lower than market consensus. Analysts point out that tokenized money market funds and bank deposit products put pressure on USDC balance and revenue sharing ratios, and Circle's USYC product economic model is weak. The transaction volume of proxy payment business has dropped to about $41900 per day, with an implied average transaction amount of about $0.24. Open USD adopts a shared governance and reserve revenue model to increase the cost of maintaining USDC distribution channels for Circle.