Bernstein keeps Circle at Outperform after 17% stock drop
VC & Fundraising ·
Bernstein reaffirmed its Outperform rating and $190 price target on Circle, implying 203% upside, even as shares fell more than 17% following the launch of rival stablecoin OUSD.
The rating reaffirmation comes as Circle's stock absorbed a sharp single-session decline tied to OUSD's debut, a new entrant in the stablecoin market that investors read as a competitive threat. Bernstein's $190 target, unchanged despite the selloff, points to a valuation gap the firm sees between Circle's current share price and what it considers the company's underlying worth, a gap now widened to 203% by the stock's drop.
The competitive backdrop is shifting on multiple fronts. Ripple has joined the OpenUSD consortium alongside more than 140 companies, including Visa and Mastercard, according to cryptopotato.com, though the resulting stablecoin will not launch on the XRP Ledger. That move adds another cross-industry stablecoin initiative to a field already crowded by OUSD's arrival, even as it stops short of directly extending Ripple's own ledger.
Circle, meanwhile, has been raising capital away from its core stablecoin business. The company closed $222 million from investors including BlackRock and Apollo to fund a presale of its Arc token, valuing the token at $3 billion, as reported by cnbc.com. The raise is tied to expansion of a layer-1 blockchain, a parallel effort separate from Circle's stablecoin issuance business that the OUSD launch and Bernstein's note center on. Circle's chief executive, Jeremy Allaire, has also said the company is exploring a native governance token for Arc with an eventual shift toward proof-of-stake, adding another moving piece to how the company's broader token strategy might interact with its stablecoin economics, a structure examined in detail by insights4vc.substack.com.
Unresolved is whether OUSD's entrance meaningfully erodes Circle's stablecoin market position or proves a transient pressure on the stock price, and how the Arc token raise and prospective governance token feed back into Circle's core business valuation that Bernstein's target is built on. Also unclear is how Ripple's OpenUSD participation, without an XRP Ledger deployment, will translate into competitive pressure versus symbolic alignment with major payment networks.