Mizuho downgraded Circle to Underperform, cutting price target from $85 to $50 on margin pressure from OpenUSD revenue-sharing model.
DeFi & Yields ·
Mizuho downgraded Circle from Neutral to Underperform, cutting its price target from $85 to $50. The Japanese investment bank attributed the downgrade to margin pressure stemming from OpenUSD's revenue-sharing structure, which distributes most reserve income to issuers and distribution partners. This model would require Circle to share greater portions of its revenue with ecosystem participants, compressing profitability.
The bank revised key financial projections downward accordingly. Mizuho raised its 2027 forecast for Circle's distribution and transaction expense ratio from 64% to 73%, while lowering its adjusted EBITDA projection from $1.09 billion to $699 million. The tightened margins reflect expectations that Circle's take-rate will shrink under the OpenUSD partnership model.
The downgrade signals concern about Circle's ability to maintain operating leverage as USDC and related products compete in a landscape where revenue must be allocated more broadly to network participants rather than retained entirely by the issuer.