Circle Internet Stock Plunges on Morgan Stanley Downgrade

Circle Internet's stock fell sharply in pre-market trade on Monday after Morgan Stanley downgraded it to 'Underweight' from 'Equal Weight', citing concerns over the company's USDC revenue model. The analyst, James Faucette, stated that USD Coin contraction exposes Circle's reserve income sensitivity and points to a lower margin shift toward transaction revenue.

The downgrade comes as the cryptocurrency market faces uncertainty due to Bitcoin's price drop below $63,000 and the stalled Digital Asset Market Clarity Act (CLARITY) in Congress. The CLARITY Act did not appear on the Senate's agenda for this week, with the chamber scheduled to enter recess on August 10.

TD Cowen initiated coverage of CRCL with a 'Buy' rating and an $82 price target, stating that Circle offers a compelling combination of attractive growth and diversification. However, the stock has fallen over 20% this year and dropped more than 65% in the last 12 months.