Morgan Stanley Downgrades Coinbase to Underweight, Slashes Target Price to $120
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Morgan Stanley cut Coinbase to underweight and slashed its price target from $258 to $120 — implying roughly 16% downside — arguing that the earnings-recovery thesis is falling apart.
Why did Morgan Stanley flip bearish?
The prior bull case rested on "an earnings reset in 2026 followed by a strong rebound in 2027," driven by rising crypto prices, returning retail traders, broader product adoption, and operating leverage.
Analyst Michael Cyprys now says weakening October trading activity and crypto-market uncertainty have undercut that recovery script.
This means → Morgan Stanley isn't turning bearish on crypto itself — it's saying Coinbase's transaction-volume-driven profit model lacks visibility in the current environment.
How big is the revenue shortfall?
Through October 25, Coinbase's Q4 transaction revenue tracked at roughly $165 million; annualized for the full quarter, that implies about $607 million.
That figure sits roughly 11% below the Street consensus of $685 million — a meaningful gap.
In plain terms = Wall Street assumed Q4 trading volumes would hold up, but the data shows retail hasn't come back, and revenue is running short of expectations.
How deep are the estimate cuts?
Morgan Stanley cut its 2027 revenue forecast by 28% and its adjusted EBITDA forecast by 47% — nearly halved.
Coinbase shares have already fallen roughly 22% over the past month, suggesting the market was pricing in pressure ahead of the downgrade.
This reflects a view that this isn't a one-quarter blip — Morgan Stanley sees Coinbase's medium-term earnings power as needing a systematic re-rating.
How does the Binance hack spill over to Coinbase?
Rival Binance suffered a roughly $6 billion hack last week — called the largest such incident in crypto history.
Cyprys argues this could further suppress trading activity across the entire crypto market, adding extra pressure on Coinbase's earnings and share price.
In plain terms = someone else's house got robbed, but everyone on the street locks their doors tighter — retail confidence in crypto trading takes collateral damage.
Where does the rest of Wall Street stand?
Morgan Stanley's underweight sits well outside the consensus: of 41 analysts covering Coinbase, 26 rate it buy or strong buy, 13 are neutral, and only a handful are negative.
This means → Morgan Stanley is the minority, but minorities aren't always wrong — the test is whether crypto trading volumes stage a meaningful recovery in the remainder of Q4.
If volumes stay weak, more analysts may be forced to follow with downgrades; if volumes rebound, Morgan Stanley becomes the one who called it too early.
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