Circle's Q3 results show resilience despite rate cut fears and competition from 'frenemies,' claims Bernstein

Analysts at research and brokerage firm Bernstein said that, while Circle's stock is currently "fighting a narrative battle against the bears," evidence suggests the stablecoin issuer's fundamentals remain robust amid strong third-quarter earnings.

Circle reported $740 million in revenue and $166 million in adjusted EBITDA for Q3 on Wednesday, beating consensus estimates by 5% and 26%, respectively, though the stock closed down 12.2% for the day, according to The Block's CRCL price page .

In a note to clients on Thursday, analysts led by Gautam Chhugani argued that recent weakness in Circle's share price reflects misplaced fears about interest-rate cuts and competitive pressures rather than any structural deterioration. "We have found no evidence to change our long-term thesis," they wrote, pointing to sustained USDC growth, improving profitability, and its upcoming Layer 1 blockchain, Arc. "Circle's USDC still looks like the prime network to participate in the exponential stablecoin growth across banking, payments, capital markets and the emerging agentic economy."

The analysts acknowledged a growing competitive threat from "frenemies" such as Stripe, which plans to launch its own Tempo blockchain and already supports USDC through its Bridge and Privy acquisitions. While some expect new entrants to erode Circle's dominance, Bernstein said USDC's liquidity advantage remains its edge, noting that even large players like PayPal and Ripple have struggled to bootstrap new stablecoins.

Bernstein also pushed back on concerns that falling rates will hurt Circle's revenue model. Assuming policy rates drop to 2% by 2027, the analysts said Circle's stock price implies a 21 to 29x enterprise value/EBITDA multiple for a company projected to grow revenue by 20% and EBITDA by 33% annually through 2027. "We suspect Circle is still very attractive with added optionality of stablecoin payments monetization," they wrote, maintaining an outperform rating and $230 price target for the stock — a 167% upside from the $86.30 close on Nov. 12.

Circle explores native token for Arc network as Q3 shows sharp growth in USDC supply

Beyond the top-line revenue and adjusted EBITDA figures, Circle's reserve income climbed 12% to $711 million, and adjusted EBITDA margin expanded by 700 basis points to 57% in the third quarter.

USDC supply also rose 20% quarter-over-quarter to $73.7 billion, pushing its market share to 29%, while balances held directly on Circle's platform increased to 14% of total supply from 10% in the prior quarter, the analysts noted.

Bernstein added that the company's ongoing network build-out — including the Arc blockchain public testnet launched in October with over 100 marquee participants and a rapidly scaling Circle Payments Network now spanning eight countries — positions Circle to benefit from sustainable USDC growth beyond crypto market cycles.

Notably, Circle also disclosed in the earnings report that it's "exploring the possibility" of a native token for its Arc blockchain beyond USDC.

Gautam Chhugani maintains long positions in various cryptocurrencies. Bernstein or its affiliates may receive compensation for investment banking or other services from Circle.