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- Bernstein maintained its $140 Circle stock price target after earnings beat expectations.
- Arc could create new revenue streams through gas fees, staking and ecosystem partnerships.
- Reserve income remains dominant as USDC circulation fell 5% sequentially.
Circle stock received a fresh vote of confidence from Bernstein after the stablecoin issuer delivered second-quarter earnings that beat Wall Street expectations, despite revenue coming in slightly below forecasts. The research firm maintained its Outperform rating and $140 price target, arguing that concerns over competition and falling reserve income may overlook Circle’s broader expansion strategy.
Circle Earnings Beat Profit Expectations
Circle reported $701 million in second-quarter revenue, representing a 7% increase from the same period last year. While the figure fell slightly short of analyst expectations, profitability was stronger than anticipated.
The company posted $48 million in net income and earnings per share of $0.18, both ahead of consensus estimates. Bernstein said the results make the bearish argument around Circle more difficult to sustain, although the stock remains under pressure.
Investors have increasingly focused on competition in the stablecoin sector and the risk that lower interest rates could reduce income generated from Circle’s reserves. Reserve income still accounted for roughly 95% of Circle’s total revenue during the quarter.
Arc Could Open New Revenue Streams
Bernstein highlighted Circle’s planned Arc public mainnet launch on Sept. 16 as a potentially important catalyst. Analysts believe the market may not yet be fully pricing in possible revenue from Arc’s gas fees, staking activities and ecosystem partnerships.
Circle expects to recognize approximately $180 million from Arc token presales during 2026. The company has also raised its 2026 guidance for revenue generated outside its reserve income business and improved its expectations for revenue less distribution costs.
The company is simultaneously expanding its financial infrastructure. Circle received approval to operate as a national trust bank and is developing the Circle Payments Network, while preparing Arc with founding validators from major financial and technology companies.
USDC Growth Faces Near-Term Pressure
Despite the longer-term expansion story, Circle still faces challenges. USDC circulation reached $73.3 billion, up 19% year over year but down 5% from the previous quarter.
Mizuho also pointed to a 31% quarterly decline in on-chain transaction volumes, alongside continued margin pressure. Those figures highlight Circle’s dependence on the broader adoption and use of USDC.
Circle stock closed the previous session near $63, with shares down roughly 20% since the start of the year. That performance contrasts sharply with Bernstein’s $140 target.
Bernstein’s bullish outlook rests on the possibility that Circle can diversify beyond reserve-based revenue through payments, blockchain infrastructure and tokenized real-world assets.
Also Read: Circle Wins New York Trust Charter: What It Means for USDC and Crypto Regulation
For investors, the key question is whether those businesses can scale quickly enough to offset pressure from stablecoin competition and potentially lower interest rates. For now, Bernstein believes Circle’s regulatory position, distribution network and upcoming Arc launch give the company significant long-term growth potential.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
