Stablecoin issuer posts record earnings but faces investor anxiety over shrinking yield margins
Circle (CRCL) stock fell as much as 10% on Wednesday, as investor worries over declining interest rates overshadowed the company’s impressive third-quarter earnings and revenue beat. Despite the sell-off, the second-largest stablecoin issuer continues to show rapid growth and expanding market share.
The company reported $740 million in total revenue and reserve income, up 66% year over year and ahead of Wall Street’s $707.3 million estimate. Adjusted earnings came in at $0.64 per share, tripling analysts’ forecasts of $0.20. Circle’s performance was driven largely by the increasing adoption of its U.S. dollar–pegged stablecoin, USDC, which saw circulation jump 108% compared to a year earlier.
However, as Circle earns most of its income from interest on short-term Treasuries backing USDC, investors grew cautious about future margins. The company’s reserve return rate dropped 96 basis points to 4.15%, reflecting the Federal Reserve’s ongoing rate-cut cycle.
CFO Jeremy Fox-Geen downplayed those concerns, telling Yahoo Finance that falling rates could, in fact, boost growth: “We’re already in a rate-cutting cycle, and through that cycle we are delivering sustained growth. Falling rates lead to greater economic activity, more risk-taking, and increased investment.”
Circle has been diversifying beyond reserve income with products such as Circle Payments and the Arc blockchain platform, now being tested by over 100 firms. Analysts, including Jeff Cantwell of Seaport Research Partners, remain optimistic, calling Arc’s potential native coin “ultimately bullish” and maintaining a Buy rating with a $280 price target.
Since its June IPO, Circle shares have surged 180%, buoyed by pro-stablecoin legislation—but they remain roughly 60% below their summer highs.
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