ARK Buys $3.4 Million in Coinbase Stock After Morgan Stanley Cuts Target

Key Facts

ARK bought an estimated $3.4 million in Coinbase shares on Monday, November 2, 2026, the same day Morgan Stanley cut its rating and price target on the stock, according to Benzinga and the bank’s note cited by Investing.com. The bank downgraded the stock to Underweight from Equal-weight and set a $120 price target, down from $258. ARK’s purchase came as a Morgan Stanley analyst saw the recovery as potentially weaker than the bank had expected. The assessment was based on more recent trading trends, a more moderate forward revenue outlook and uncertainty surrounding the impact of the Binance hack. The fund’s purchase thus coincided with a more pessimistic reassessment of Coinbase’s revenue and profitability trajectory.

Analyst Michael Cyprys said that "more recent trading trends, a more moderate forward revenue outlook and uncertainty surrounding the crypto sector in the context of the recent Binance hack point to a weaker recovery." Coinbase reported third-quarter revenue of $1.22 billion, 6% below Morgan Stanley’s estimate. Transaction revenue recorded through October 25 also pointed to an annualized rate of about $607 million for the fourth quarter. That rate is about 50% below the bank’s previous estimate and 11% below analyst consensus. These indicators prompted the bank to cut its revenue and earnings forecasts again for the next two years.

Morgan Stanley cut its forecasts for Coinbase revenue by 28% in 2027 and 18% in 2028. It also reduced its estimates for adjusted EBITDA by 47% for 2027 and 25% for 2028. The bank’s revised estimate for this measure in 2028 was about $2.4 billion, 14% below the 2025 level. These revisions put the company’s recovery trajectory under pressure from weaker expectations for its core activity, despite growth in other revenue sources. The rating cut does not mean the bank expects growth to disappear, but reflects a lower estimate for revenue and earnings than in its previous forecasts.

Coinbase reported net revenue of $1.2 billion in the third quarter of 2026, compared with $1.8 billion in the same period of 2025. Monthly transacting users fell to 7.4 million from 9.3 million a year earlier. By contrast, the company said subscriptions and services accounted for 49% of third-quarter net revenue, and its share of cryptocurrency trading volume rose to 10.7% for a fourth consecutive quarter. Its prediction markets also exceeded $200 million in annualized revenue, while average USDC balances across its products reached a record $22 billion. But retail spot trading still accounted for about 40% of Morgan Stanley’s forecast for Coinbase revenue in 2027, keeping the performance of that business central to the bank’s assessment.

Morgan Stanley linked some of the sector’s risks to the Binance security breach, which it valued at about $6.3 billion. The bank said the incident could weaken confidence in centralized crypto platforms and increase regulatory scrutiny, while emphasizing that Coinbase was not directly affected. In the bank’s view, the incident matters because of its potential broader effect on user confidence and the regulatory environment, rather than any direct harm to Coinbase. This concern formed part of a set of factors that also included weaker trading and revenue expectations. Coinbase shares closed at $137.83 on November 2, after closing at $161.09 on October 27.

Revenue from Coinbase’s prediction markets exceeded an annualized rate of $200 million, one of the business diversification indicators the company highlighted in its third-quarter results. Record USDC balances, averaging $22 billion, provided another sign of expansion in its subscriptions and services business. These developments did not stop Morgan Stanley from cutting its estimates, as retail spot trading still accounted for about 40% of its 2027 revenue forecast. This places the expansion of newer businesses alongside the continued reliance of forecasts on retail trading activity. ARK bought Coinbase shares on the day the bank released its revised rating and forecasts.