Thomas Daniels
JPMorgan Chase has initiated coverage of Circle (CRCL) with an underweight rating and a price target of $80 by December 2026, implying a sharp 55% downside from the current share price of $180.
In its “North America Equity Research” report, led by analyst Kenneth Worthington, the investment bank bases its valuation on a 45x multiple of projected 2027 earnings per share, supplemented by a $10 premium for upside potential. While this target represents a significant premium over Circle’s IPO price of $31, it also reflects a marked discount relative to current market valuations.
Market Capitalization Cut in Half?
According to CompaniesMarketCap, Circle currently boasts a market capitalization of $43.8 billion, a substantial increase from its $8 billion valuation at IPO when the company debuted on the New York Stock Exchange on June 5. JPMorgan’s $80 target implies a reduced valuation of approximately $21 billion by late 2026, suggesting that the current market price may be overextended given competitive and regulatory headwinds.
Intensifying Competition and Regulatory Headwinds
While Circle benefits from its early-mover advantage and widespread adoption of its USDC stablecoin, JPMorgan sees the company facing a growing array of competitors. This includes not only rival stablecoins but also newer digital financial instruments such as tokenized deposit accounts and digital money market funds.
JPMorgan warns that low switching costs could enable competitors to capture market share rapidly, leveraging the infrastructure that Circle has built. “The risk is that a few players will achieve critical mass in a low-friction market, eroding Circle’s position,” analysts wrote.
Moreover, proposed U.S. stablecoin regulations—potentially requiring issuers to hold equity capital proportionate to their outstanding tokens—could create operational constraints. Although JPMorgan believes Circle currently holds sufficient capital to back its USDC reserves, any increase in capital requirements could slow the token’s growth trajectory.
The Threat of CBDCs to Global Expansion
The rise of central bank digital currencies (CBDCs) adds another layer of complexity. While U.S. regulatory policy remains relatively supportive of private stablecoins, the global adoption of CBDCs—especially in Europe—could undermine Circle’s international expansion prospects and long-term profitability.
“Further global CBDC adoption, particularly in Europe, could impact Circle’s ability to scale globally, adversely affecting long-term growth and profitability,” JPMorgan’s report concludes.
