Key facts
- Morgan Stanley downgraded Circle Internet to underweight.
- Morgan Stanley cut Circle Internet's price target to $38.
- Morgan Stanley previously had a price target of $106 for Circle Internet.
- Reasons for the downgrade include weaker reserve income.
- Reasons for the downgrade include lower-margin revenue shifts.
- Reasons for the downgrade include increasing competition.
- Competition arises from tokenized cash products.
- Competition arises from new stablecoin models.
Morgan Stanley has issued a downgrade for Circle Internet, moving its rating to "underweight." Concurrently, the investment bank drastically reduced its price target for the company's stock, lowering it from $106 to $38. This bearish outlook is driven by several key factors identified by Morgan Stanley analysts. Foremost among these concerns is a perceived weakening in Circle Internet's reserve income. Additionally, the company is reportedly experiencing a shift in its revenue streams towards models that yield lower profit margins. The competitive landscape is also cited as a significant pressure point. Morgan Stanley points to the increasing emergence of tokenized cash products and the development of new stablecoin models as key competitive threats that could impact Circle Internet's market position and future profitability.