Morgan Stanley cut its price target for Coinbase shares from $258 to $120, warning that a slowdown in crypto trading could weigh on the company’s earnings for years.
According to a November 2 assessment cited by CoinDesk, the bank downgraded its rating on COIN from “equal weight” to “underweight.” The roughly 53% price-target cut showed a marked deterioration in expectations for Coinbase’s weakening revenue outlook.
Morgan Stanley analyst Michael Cyprys said the bank’s confidence in an earnings recovery had declined. In addition to lower trading activity and a weakening revenue outlook, he also factored in uncertainty in the crypto market caused by the recent attack on Binance.
Coinbase trading revenue fell 44%
The downgrade followed Coinbase’s third-quarter results, announced the previous week. The company’s total revenue fell 35% year over year to $1.22 billion, while trading revenue declined 44% to $590 million. Subscription and services revenue also fell 20% to $570 million.
Crypto market trading volume contracted 10% in the same quarter, while price volatility fell to its lowest levels in several years. For Coinbase, which derives a significant share of its revenue from trading fees, this painted a picture of how stagnant investor trading activity was weighing on its balance sheet.
According to early-session data for November 2 cited in the report, COIN shares were down 2.3% at $140.25. The decline followed a loss of about 10% the previous week.
Bank also lowers recovery expectations
Morgan Stanley cut its 2027 revenue estimate by 28% and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) estimate by 47%. For 2028, it cut its revenue estimate by 18% and its adjusted EBITDA estimate by 25%.
The bank now expects Coinbase to generate $2.4 billion in normalized EBITDA in 2028. Despite the company’s expansion into new business areas, that amount would be about 14% below its 2025 level. Morgan Stanley also lowered the EBITDA multiple it uses to value the company from 20x to 12x.
Expense pressures loom in the new quarter
Coinbase’s fourth-quarter outlook also offered no strong signal of a recovery. The company reported generating about $165 million in trading revenue through October 25, while forecasting subscription and services revenue of $550 million–$630 million for the full quarter.
Adjusted expenses are expected to rise from $975 million in the third quarter to $1.01 billion–$1.16 billion. In contrast, the company lowered its full-year adjusted expense forecast to a range of $4.15 billion–$4.30 billion.
Not investment advice.