Morgan Stanley has downgraded Coinbase, shifting its rating from Equal-weight to Underweight and slashing its price target from $258 to $120. The bank cited weakening confidence in an earnings recovery, pointing to recent trading trends, a softer revenue outlook, and uncertainty following the Binance hack.
Coinbase’s third-quarter revenue of $1.22 billion fell 6% short of Morgan Stanley’s expectations. Transaction revenue through October 25 suggests a fourth-quarter run rate of about $607 million, roughly 50% below the bank’s prior estimate and 11% below consensus forecasts.
Analyst Michael Cyprys noted that the $6.3 billion Binance security breach could erode trust in centralized crypto platforms and increase regulatory scrutiny, even though Coinbase was not directly impacted. Morgan Stanley reduced its 2027 and 2028 revenue forecasts by 28% and 18%, respectively, and lowered its adjusted EBITDA estimates by 47% and 25%. The revised 2028 adjusted EBITDA forecast of $2.4 billion is 14% below 2025 levels.
Cyprys acknowledged Coinbase’s efforts to diversify, with prediction markets exceeding $200 million in annualized revenue. However, retail spot trading still makes up about 40% of the bank’s 2027 revenue forecast. Despite viewing Coinbase as one of the best-positioned platforms in crypto, Morgan Stanley sees greater downside risk to earnings and valuation, supporting its downgrade.