Circle Internet Group Inc. (NYSE: CRCL) will report second-quarter earnings before the market opens on Wednesday, facing heightened scrutiny from investors as short interest in the stock rises to 27.11 million shares, representing 12% of its publicly available float. Analysts estimate the stablecoin issuer will post earnings per share of $0.19, a significant turnaround from the loss of $0.43 per share recorded in the same quarter last year. The upcoming results are critical for the company, which has seen its shares plunge nearly 24% year-to-date and close 3.61% lower at $60.35 on Monday.

Revenue Expectations and USDC Circulation

Wall Street expects Circle to report revenue of $734.7 million for the quarter, reflecting an 11% year-over-year increase and nearly a 6% rise from the previous quarter. This projection follows the first quarter, where the company exceeded earnings expectations but fell short of revenue estimates. A key driver of Circle’s financial performance is its interest income earned on reserves backing its USDC stablecoin, primarily held in short-term U.S. Treasuries and cash. However, USDC circulation fell 4.6% in the second quarter to $73.77 billion, according to DeFiLlama data, potentially impacting interest income generation despite broader market growth.

Analyst Sentiment and Price Targets

Despite the recent stock decline, Circle carries a consensus "Buy" rating from 21 analysts, who converge on an average price target of $120, implying approximately 99% upside from current levels. TD Cowen launched coverage on Monday with a "Buy" rating and an $82 price target. Analyst Bryan Bergin cited a "compelling combination" of attractive growth and diversification via USDC circulation and rapidly growing high-margin fee-based revenues. However, earlier in the month, Bernstein lowered its price forecast by 26%, from $190 to $140, while Mizuho maintained a Neutral rating with a $45 target.

Market Positioning and Technical Indicators

The rise in short interest to 12% of the float is typically interpreted as a bearish signal, suggesting skepticism among traders about near-term performance. Conversely, options market activity shows strong bullish speculation, with traders buying significantly more call options than put options. The Bull Bear Power Indicator remains "Neutral," according to TradingView, indicating balanced strength between buyers and sellers. Benzinga’s Edge Stock Rankings note that CRCL has underperformed with a weaker price trend across short-, medium-, and long-term timeframes. The company’s ability to beat earnings estimates again, as it did in Q1, could be pivotal in proving bears wrong and stabilizing its stock trajectory.

Analysts are sharply divided on Circle Internet Group (NYSE: CRCL), with Morgan Stanley downgrading the stock to a $38 target while TD Cowen initiated coverage with a Buy rating and an $82 target. Morgan Stanley’s downgrade reflects concerns over USDC supply contraction and a structural shift toward lower-margin transaction revenue, whereas TD Cowen highlights the company’s potential as a diversified platform spanning payments, treasury, and tokenized real-world assets.

Morgan Stanley: Sell on Reserve Income Sensitivity

Morgan Stanley analyst James Faucette cut his price target to $38 from $106, citing USDC contraction that exposes reserve income sensitivity. Faucette slashed USDC supply assumptions by roughly 33% for 2027 and 44% for 2028, placing his GAAP EPS estimates 3% and 20% below consensus, respectively. He noted that stablecoin activity remains overwhelmingly skewed toward crypto trading and transfers rather than real payments.

Faucette cited McKinsey data estimating roughly $35 trillion in adjusted stablecoin volume, of which only $390 billion represents identifiable payments, roughly 0.5% of total activity. He argued that while use cases in cross-border B2B and consumer remittances are growing, they have not yet demonstrated the ability to create durable balances or recurring transaction economics needed to offset pressure on Circle’s reserve-income model. Additionally, he flagged Open USD’s shared governance and reserve economics as raising the cost of defending USDC distribution, calling agentic payments “immaterial” with daily volume at just $41,900.

TD Cowen: Buy on Platform Diversification

TD Cowen analyst Bryan Bergin initiated coverage with an $82 price target, implying 31% upside from Friday’s close. Bergin stated that the market underestimates Circle’s evolution into a platform player spanning payments, treasury, tokenized real-world assets, interoperability, and developer services. He highlighted a compelling combination of attractive growth and diversification via USDC circulation, rapidly growing high-margin fee-based revenues, and Arc optionality.

Analyst Sentiment and Key Levels

Of the 30 analysts covering Circle, 16 rate it a hold or sell, with the remaining 14 at buy or strong buy, according to LSEG data. CRCL is down 5%, pressing directly onto the hard support line at $59.47 that has held since late June. Bollinger Bands are squeezing at the lower band of $58.75, with price sitting on both simultaneously. All four EMAs stack overhead and declining, with the stock buried under every major average.

Holding $59.47 post-earnings opens a relief bounce toward $65. Losing it puts $50 in play with no visible support in between.

Key Technical Levels for CRCL

What the Numbers Show

The divergence in analyst views highlights a fundamental debate on Circle’s business model sustainability. Morgan Stanley’s bearish case rests on the assumption that stablecoin utility remains limited to speculative trading, thereby capping the value of reserve income. In contrast, TD Cowen’s bullish thesis depends on the successful transition to high-margin fee-based revenues through platform diversification. The narrow window between the hard support at $59.47 and the resistance at $65.22 suggests heightened volatility ahead of earnings, with a breach of support potentially triggering a significant downside move toward $50.