Mizuho Cuts Circle Target to $50 on OpenUSD Threat
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- Mizuho downgraded Circle from neutral to underperform and cut its price target to $50 from $85, arguing OpenUSD's business model could fundamentally alter Circle's reliance on retained reserve yield.
- OpenUSD, unveiled June 30 by the Open Standard consortium of 140+ partners including Mastercard, Stripe, Coinbase, and BlackRock, charges a small operating fee and distributes most reserve income to issuers and distributors—contrasting with USDC's model of capturing yield before sharing.
- Circle's USDC circulating supply fell to roughly $73 billion from nearly $80 billion in March, as the broader stablecoin market shrank by about $10 billion since May amid softer crypto trading activity.
- Mizuho raised its 2027 distribution and transaction cost estimate for Circle to 73% from 64%, cutting its adjusted EBITDA forecast to $699 million from $1.09 billion—approximately 25% below Wall Street consensus of $941 million.
- Circle faces an August renegotiation of its revenue-sharing agreement with Coinbase, its largest distribution partner, and Mizuho warned that Coinbase's backing of OpenUSD could strengthen its negotiating leverage.
- JPMorgan, in a separate Tuesday note, flagged Hyperliquid's deal with Circle and Coinbase as creating a "prisoner's dilemma" that pressures Circle's USDC economics.
- Circle shares were trading 0.6% lower at $62.63 at the time of publication.
Why it matters: Mizuho now projects Circle's 2027 EBITDA at roughly 25% below consensus ($699M vs. $941M), driven by distribution costs jumping to 73% from 64%. With USDC supply already down ~$7B from March and Coinbase renegotiating its revenue share in August while simultaneously supporting rival OpenUSD, Circle's core moat—retained reserve yield—faces simultaneous pressure from the supply side, the demand side, and its biggest distributor.
