- Morgan Stanley turned bearish. Analyst Michael Cyprys downgraded Coinbase to underweight from equal weight on Monday and cut his price target to $120 from $258, implying 16% downside from Friday’s close, according to CNBC. “Confidence in the earnings recovery has deteriorated,” he wrote, citing weaker trading activity, a softer revenue outlook and uncertainty in crypto markets after the recent Binance hack.
- The estimate cuts are steep. The bank lowered its 2027 revenue forecast by 28% and its adjusted EBITDA estimate by 47%, and trimmed 2028 revenue and adjusted EBITDA by 18% and 25%. It now expects about $2.4 billion in normalized EBITDA by 2028, roughly 14% below 2025 levels, and cut the multiple it applies to that EBITDA to 12 times from 20 times.
- October was weak. Coinbase booked about $165 million in fourth-quarter transaction revenue through Oct. 25, putting it on pace for roughly $607 million, about 11% below the $685 million consensus, CNBC reported. That follows a third quarter in which revenue fell 35% from a year earlier to $1.22 billion, with transaction revenue down 44% to $590 million and subscription and services revenue down 20% to $570 million.
- The call runs against the Street. Of 41 analysts covering Coinbase, 26 rate it a buy or strong buy and 13 a hold, according to LSEG data. The shares were down 2.3% at $140.25 in early trading, adding to last week’s 10% decline, and have fallen about 22% over the past month.
What Happened?
Morgan Stanley downgraded Coinbase days after the exchange reported a weak third quarter. Cyprys warned that a slowdown in crypto trading and weaker revenue prospects could weigh on the exchange’s earnings for years. Crypto market trading volume fell 10% in the third quarter while price volatility sank to multiyear lows, squeezing the transaction fees that make up much of Coinbase’s revenue. For the fourth quarter, Coinbase has guided subscription and services revenue of $550 million to $630 million and adjusted expenses of $1.01 billion to $1.16 billion, up from $975 million in the third quarter.
Why It Matters?
The downgrade goes to the heart of the bull case for crypto exchanges: that trading volumes recover once prices stabilize. Even when prices have rebounded this year, activity has stayed subdued, and the roughly $6 billion Binance hack, the largest in crypto history, could further dent trading, according to Cyprys. Cutting the valuation multiple from 20 times to 12 times EBITDA signals that Morgan Stanley no longer sees Coinbase earning a premium for growth. With most analysts still bullish, the call highlights a widening split on whether Coinbase is cheap after its slide or still pricing in a recovery that may not come.
What’s Next?
The next test is the rest of the fourth quarter: if transaction revenue keeps tracking near the $607 million pace, consensus estimates will likely come down toward Morgan Stanley’s numbers. Investors will watch spot trading volumes, Binance outflows and any signs that retail engagement is returning after the hack. Progress on growth areas outside trading, along with Coinbase’s ability to hold expenses within its lowered full-year range of $4.15 billion to $4.30 billion, will determine whether the bearish view sticks.
