Shares of Circle Internet Group (CRCL) fell sharply on Thursday, declining 7.44% to $87.41, following a downgrade from Compass Point. The firm cut its rating to Sell from Neutral and lowered its price target to $77 from $79, citing concerns over a looming margin squeeze tied to the company's core USDC stablecoin business.
The downgrade was driven by a structural shift in USDC supply growth. Compass Point analysts noted that just under 80% of USDC supply growth since early February has come from platforms like Sky, Binance, and Ethena. These partnerships involve distribution agreements that reduce Circle's share of the interest income generated from USDC reserves. Circle earns higher margins on "off-platform" supply, and the shift toward partnership-driven growth is diluting profitability even as overall adoption rises.
Analyst Ed Engel warned that "CRCL’s 1Q results could underwhelm rising expectations" and expects gross margins to remain under pressure. Compass Point estimates Circle's Q1 2026 EBITDA will fall 19% quarter-over-quarter, and its fiscal 2027 EBITDA forecast is 20% below Wall Street consensus.
The news coincided with an insider sale. Circle director Rajeev Date sold 1,273 CRCL shares on April 7 at $95 each, totaling $120,935, under a pre-arranged Rule 10b5-1 plan. His holding decreased by 0.83% to 152,328 shares, still valued at over $14.4 million.
This caution contrasts with Circle's recent strong financial performance. The company beat Q4 2025 EPS estimates ($0.43 vs. $0.25 expected) and reported revenue of $770.23 million, up 76.9% year-over-year. USDC circulation grew 72% to $75.3 billion in the period, though reserve income of $733 million highlighted the company's heavy reliance on interest rates.
Despite the sell rating, broader Wall Street sentiment remains mixed. The average analyst price target sits at $126.29 with a consensus Hold rating. Major institutions, including Vanguard, increased their stakes in Q3 2025.
