Circle Revenue Could Drop 9% with Each 25 Basis Point Rate Cut
Bernstein reports that Circle (CRCL) may face revenue challenges if U.S. interest rates drop significantly but could benefit from strong stablecoin demand and operating leverage.
A 25 basis point rate decline is projected to reduce 2027 revenue by 9% and EBITDA by 11%, with rates under 2% leading to $668 million in EBITDA and a 33% CAGR from 2024 to 2027.
Circle's USDC could exceed the $170 billion base case in a low-rate environment due to increased demand on exchanges and DeFi markets.
Bernstein forecasts the stablecoin market to grow to approximately $670 billion by 2027, with Circle's USDC capturing a 33% market share.
Circle's operating margins are expected to rise from 43% in 2024 to 51% by 2027, despite shrinking float income, as supply increases five-fold.
High-margin revenue from integration and transaction services is anticipated to reach 9% of total revenue under bearish conditions.
Despite rate sensitivity, Bernstein concludes that Circle's earnings should remain resilient due to demand growth and scale.
