Bernstein has reaffirmed its Outperform rating and $140 price target on Circle following the stablecoin issuer's second-quarter earnings report, which exceeded profit expectations despite revenue falling slightly short of analyst forecasts. Circle, the company behind USDC — the world's second-largest stablecoin by market capitalization behind Tether's USDT — has been navigating heightened market scrutiny over its valuation and growth trajectory. The research firm argued that prevailing investor concerns fail to account for the company's broader strategic expansion beyond reserve income.

Circle reported Q2 revenue of $701 million, representing a 7% year-over-year increase. Net income reached $48 million, with earnings per share of $0.18 — both figures surpassing analyst expectations. Bernstein stated that the results made the bearish thesis against the stock increasingly difficult to sustain.

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LATEST: Bernstein keeps its $140 target on Circle, saying the company's Q2 results challenge the bearish case. $CRCL #Bernstein #Crypto — Roundtable Network (@RTB_io) August 6, 2026

Stock Pressure and Investor Concerns

Circle's stock closed near $63 before trading lower ahead of Thursday's market open. Shares have declined approximately 20% since the start of the year, reflecting sustained pressure on the company's valuation. Investor attention has centered on intensifying stablecoin competition and the potential for declining reserve income, as lower interest rates could reduce returns on the assets backing USDC. Stablecoin issuers like Circle hold reserves predominantly in short-term U.S. Treasury instruments and cash equivalents, meaning their core revenue is directly sensitive to Federal Reserve rate decisions.

Bernstein countered that these concerns overlook other dimensions of Circle's growth strategy. Analysts highlighted the company's distribution reach and broader operating model, suggesting these strengths could underpin revenue growth independent of interest-based earnings. Circle's payment and infrastructure activities were cited as key components of Bernstein's positive assessment.

Arc Mainnet Launch and Revenue Guidance

Bernstein identified Arc, Circle's blockchain platform, as an additional growth catalyst. The company plans to launch the Arc public mainnet on September 16. Analysts believe current market estimates do not fully capture several revenue streams associated with the network, including gas fees, staking, and ecosystem partnerships.

Management expects Arc to generate approximately $180 million in revenue from token presales in 2026 — a figure Bernstein says the market has not yet fully priced in.

Circle also raised its 2026 guidance for non-reserve revenue and improved its outlook for revenue less distribution cost margins. Both upward revisions pertain to revenue streams that are not dependent on returns from USDC reserves.

During the second quarter, Circle expanded its infrastructure activities. The company received clearance to operate as a national trust bank, a federal designation that places it under OCC supervision and among a small group of digital asset firms with regulated banking status. The company also advanced development of both the Circle Payments Network and Arc alongside significant founding validators.

Reserve Income and USDC Supply

Reserve income remained the primary revenue driver, accounting for roughly 95% of total revenue. This heavy concentration ties the business closely to interest earned on assets backing its stablecoin reserves — a dependency that makes any shift in the interest rate environment a central variable for near-term earnings.

USDC supply stood at $73.3 billion at quarter end, down 5% compared to the prior quarter but still 19% higher year over year.

Mizuho adopted a more cautious stance, flagging the reduced USDC supply, a 31% quarterly decline in transaction volumes, and margin pressures. Bernstein, however, reaffirmed its rating, citing growth opportunities in payments, tokenized securities, regulation, and Arc as key reasons for maintaining its bullish outlook. The split between the two firms reflects the broader debate surrounding Circle: whether diversification into payments, blockchain infrastructure, and tokenization can meaningfully reduce the company's dependence on reserve income.