Circle's stock price surges, triggering a short squeeze, with Bernstein reaffirming a target price of $190.

Stablecoin issuer Circle’s stock price surged above $90 yesterday (2/26), reaching the highest level since mid-November. Since the earnings report was released, it has risen over 40%, causing short squeezes that resulted in hedge funds losing a massive $500 million in a single day. Bernstein reaffirmed its “outperform the market” rating and a target price of $190.

Circle’s earnings beat expectations: revenue and profits both surprise

Stablecoin issuer Circle (NYSE: CRCL) recently released its Q4 FY2025 financial report. Demonstrating strong profitability, Q4 total revenue and reserve income reached $770 million (up 77% year-over-year). After deducting distribution and trading costs, the core RLDC (Revenue Less Distribution Costs) profit margin expanded to 40%, and adjusted EBITDA skyrocketed 412% to $167 million.

(Stocks rebound quickly! Circle’s earnings report boosts stock by 20% intraday, Bitcoin and Ethereum recover)

Short squeeze: hedge funds suffer $500 million loss in one day

The surge in Circle’s stock price caused a short squeeze. According to analysis by market tracking firm 10x Research, hedge funds had already built large short positions before the earnings release, betting on a market correction. However, as buying momentum surged after the report, the stock price quickly broke through key resistance levels, forcing short sellers to buy back shares at market price to cover their positions, further driving up the price and intensifying the short squeeze. It is estimated that this short squeeze caused investors to lose about $500 million within just 24 hours.

10x Research believes another significant driver is the newly launched ProShares Genius Money Market ETF (IQMM), designed specifically for compliant “Genius Act” regulations. This ETF, aimed at stablecoin reserve assets, raised an astonishing $18 billion within just a few days of its launch.

Bernstein reaffirms $190 target price

Different analysts have varying outlooks for Circle’s future. Mizuho raised its target price from $77 to $90 but maintained a “Neutral” rating, noting that explosive growth in markets like Polymarket could be a long-term tailwind for USDC. However, upcoming interest rate cuts could pose risks, as reserve income remains a primary revenue source for Circle.

Bernstein reaffirmed its “outperform” rating and a $190 target price, citing that both revenue and adjusted EBITDA exceeded expectations. Bernstein pointed out that Circle’s trading revenue is strong, including blockchain rewards related to Circle’s role as a Canton network super validator, and the increasing holdings of USDC on Circle’s platform. USDC circulation is expected to continue growing at a compound annual rate of 40%, with other revenues projected to grow from $110 million in 2025 to $170 million in 2026.

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