Circle Shares Jump as Earnings Beat, Arc Wins Institutional Backing

Circle’s exposure to USDC depends not only on issuing the dollar token but also on the distribution network around it. Coinbase, a longtime partner, held more than 25% of USDC in circulation, or about $19 billion on average, across its products in the first quarter of 2026. Open USD challenges that model by promising fee-free minting and redemption and returning most reserve income to participating businesses, raising questions about Circle’s margins and USDC’s moat.

Open Standard unveiled Open USD on June 30, 2026, with backing from more than 140 companies, including Coinbase, Visa and Mastercard. Circle shares fell nearly 16% that day to $63.99. Executives at the three backers have since framed their involvement as part of a multi-stablecoin strategy, not a withdrawal of support for USDC, and OUSD is not expected to go live until later in 2026. Analysts say adoption will hinge on execution and whether OUSD can overcome USDC’s deep liquidity and entrenched network effects.

Circle Internet Group’s business is anchored by USDC, the dollar-pegged stablecoin whose reserves are held largely in cash and short-term U.S. government securities. That structure leaves revenue highly sensitive to both USDC circulation and interest rates. Tokenized money-market funds pose a growing challenge because they can give investors direct access to underlying yields, potentially drawing funds away from non-yield-bearing stablecoins and reducing Circle’s reserve base and earnings power.

Morgan Stanley downgraded Circle (NYSE: CRCL) to Underweight from Equal-weight on Aug. 3, 2026, and cut its price target to $38 from $106, a reduction of about 64%. The bank said the contraction in USDC circulation had exposed Circle’s dependence on reserve income, while tokenized funds could push its revenue mix toward lower-margin transaction businesses. Circle shares fell about 7% after the downgrade, reflecting concern that intensifying onchain competition could weaken the stablecoin issuer’s growth and profitability.

Circle Internet Group issues USDC, the world's second-largest U.S. dollar stablecoin, and its business is closely tied to interest rates, stablecoin usage and regulatory developments. Cathie Wood's ARK Invest has increased its holdings again, reflecting a major growth fund's bet on digital-dollar infrastructure and Circle's future expansion.

Circle reported first-quarter earnings on May 11, 2026, posting earnings per share of 21 cents, above market expectations. ARK Invest bought 41,904 shares that day through ARKK, ARKW and ARKF, spending $5.5 million. Circle shares closed 16% higher at $131.76, their highest close since March 18. It was ARK's first increase in its holdings since spending $16.3 million on March 24.

Circle, the issuer of USDC, relies heavily on the stablecoin’s circulation and income from its reserve assets. As stablecoins expand into cross-border settlement, corporate payments and on-chain finance, Circle’s fiscal first-quarter 2026 results offer a key gauge of USDC’s growth momentum and the company’s ability to expand into blockchain infrastructure and machine-to-machine payments.

Circle reported that USDC circulation rose to $77 billion in its fiscal first quarter of 2026, while on-chain transaction volume increased 263% from a year earlier. Revenue, however, fell short of market expectations. The company also said the token for its Arc blockchain raised $222 million in a presale and launched Agent Stack to serve demand for autonomous transactions and payments by AI agents. Its shares surged nearly 16% after the results were released.

Circle issues the U.S. dollar-backed stablecoin USDC and earns most of its revenue from interest generated by the reserve assets backing the token. As stablecoins increasingly enter payments and financial markets, Circle’s profitability has become a key gauge of USDC adoption and the digital-asset industry’s development.

Circle reported earnings per share (EPS) of $0.43 for the fourth quarter of 2025, above Wall Street’s estimate of $0.35 and about 23% ahead of expectations. Investors bet that stablecoin demand would continue to grow after the results, sending Circle shares up more than 15% at one point in U.S. premarket trading.

Circle issues USDC, the world’s second-largest U.S. dollar stablecoin, and earns most of its revenue from interest on reserves held in cash and short-term U.S. Treasuries. Growth in USDC circulation therefore directly boosts revenue. Circle is developing Arc as an L1 network for payments, foreign exchange and AI-agent micropayments, a key test of whether it can evolve from an interest-driven business into a network platform.

Circle reported fourth-quarter 2025 revenue of $770 million on February 25, 2026, up 77% from a year earlier, and net income of $133 million. Its shares jumped more than 20% intraday. On May 11, it also announced a $222 million presale of the ARC token at a $3 billion valuation. A beta version of the Arc mainnet is scheduled to launch later in the year, with Agent Stack and micropayments targeting AI-agent transactions.

Circle issues the US dollar stablecoin USDC and earns most of its revenue from interest on reserve assets. USDC can support cross-border payments and is also suited to low-value, high-frequency microtransactions between AI agents. Bernstein therefore expects stablecoins to evolve from crypto trading instruments into financial infrastructure for the internet, with Circle's growth depending on greater circulation and broader use cases.

Bernstein reiterated its “outperform” rating on Circle and its $190 price target on March 10, 2026. The target was about 70% above the March 9 closing price of $111.84, after the shares had earlier risen 9.74% that day. On March 25, Bernstein said the market had misread the CLARITY Act: its restrictions primarily targeted yield payments by distributors such as Coinbase, not Circle's interest income from USDC reserves.

Circle issues USDC, which is pegged one-to-one to the US dollar, and earns most of its revenue from interest on reserve assets. With interest rates remaining elevated and tokenized markets expanding, its role is shifting from a crypto trading tool to payment and settlement infrastructure. Clear Street said the value of tokenized assets grew from about $1.5 billion in early 2023 to roughly $26.5 billion in March 2026.

As of March 16, 2026, Circle shares had risen more than 100% over one month. The stock gained 8% that day to $124.37 and was up about 49% year to date, while Bernstein had set a $190 price target. A March 13 report said Aon was piloting stablecoin premium payments with Coinbase and Paxos, while Wells Fargo had filed a trademark application for “WFUSD” covering trading, payments, wallets and custody.

Circle issues the U.S. dollar stablecoin USDC, which briefly lost its peg during the collapse of Silicon Valley Bank in 2023. As stablecoins increasingly become core tools for cross-border payments and onchain finance, Circle is evolving from a single-product issuer into a financial infrastructure provider spanning payments, settlement and blockchain networks.

Circle’s 2025 results showed that year-end USDC circulation rose 72% from a year earlier to $75.3 billion, helping lift full-year total revenue by 64% to $2.7 billion. Quarterly transaction volume approached $12 trillion, up 247% year over year. The testnet for its Arc blockchain is progressing smoothly, with the mainnet expected to launch in 2026.

Circle issues the U.S. dollar stablecoin USDC and derives most of its revenue from income on the cash and U.S. Treasury reserves backing the token. The company went public in June 2025. USDC’s rapid expansion has made Circle’s results an important gauge of stablecoin adoption and the company’s sensitivity to interest rates.

Circle reported fourth-quarter 2025 revenue of $770 million, beating market expectations. USDC in circulation exceeded $75 billion at year-end, up 72% from a year earlier. Although IPO-related stock-based compensation pushed the company to an annual loss, its shares initially rose more than 20% after the results, with the gain later approaching 50%. Bernstein also reiterated its $190 price target.