Circle Shares Fall 10% on Analyst Downgrade

Shares of Circle Internet Group plunged nearly 10 percent on Thursday, closing at 85.10 in Nasdaq trading, as an analyst downgrade and fallout from a recent cryptocurrency exploit intensified concerns about the stablecoin issuer's profitability and risk exposure.

The decline followed a downgrade by Compass Point analysts, who shifted their rating on Circle from neutral to sell and lowered the price target to 77, suggesting about nine percent potential downside from current levels. The firm cited thinning profit margins tied to Circle's USDC stablecoin business, particularly its reliance on interest income from reserves backing the token. Distribution costs, including partnerships with platforms like Coinbase, have risen sharply, squeezing gross margins from 10.5 percent in 2024 to 5.9 percent last year. Circle reported full-year 2025 revenue of 2.75 billion, a 64 percent increase from the prior year, but posted a net loss of 69.52 million, partly due to IPO-related expenses.

Adding to the pressure, a major exploit on the Drift Protocol decentralized exchange last month resulted in losses of around 280 million. Attackers converted stolen assets into USDC, but Circle did not...