Morgan Stanley cuts Coinbase target to $120 from $258 and downgrades rating
Key Facts
Morgan Stanley downgraded Coinbase to Underweight from Equal Weight and cut its price target to $120 from $258, according to a client note cited by Investing.com on Monday, November 2, 2026. The decision reflects a sharp reassessment of the exchange’s revenue recovery, with the bank lowering its expectations for trading activity in the fourth quarter and subsequent years. Analyst Michael Cyprys said recent trading trends, weaker revenue expectations and uncertainty surrounding the cryptocurrency market pointed to a weaker recovery than previously expected. He added that the bank’s estimates were also affected by the backdrop created by the recent security breach at Binance. The report did not give a new share price or a market reaction directly tied to the note.
Coinbase reported third-quarter revenue of $1.22 billion, 6% below Morgan Stanley’s estimate, according to the report. The company’s financial disclosure shows net revenue of $1.2 billion for the three months ended September 30, 2026, compared with $1.8 billion in the same period of 2025. Coinbase also reported net income of $719 million and adjusted EBITDA of $333 million for the quarter. The company said the measure rose 60% quarter over quarter, marking its fifteenth consecutive quarter of positive adjusted EBITDA. The results pair a positive quarterly figure with an annual decline in net revenue and a shortfall against the bank’s estimate.
The fourth-quarter trading revenue estimate was central to the cut in expectations. Transaction revenue recorded through October 25 implies a quarterly run rate of about $607 million, Morgan Stanley said, roughly 50% below the bank’s previous estimate and 11% below analyst consensus. The reading reflects a slowdown in revenue tied to trading activity compared with what the bank expected before updating its estimates. Further out, Morgan Stanley cut its Coinbase revenue forecasts by 28% for 2027 and 18% for 2028. It also lowered its adjusted EBITDA estimates by 47% for 2027 and 25% for 2028.
The analyst included the Binance security breach among the uncertainties facing the sector, saying the incident, estimated at about $6.3 billion, could weaken confidence in centralized cryptocurrency exchanges and increase regulatory scrutiny. The report said Coinbase was not directly affected by the breach, but linked its fallout to the broader market climate. Binance said its hot wallets were breached on October 29 and that it would bear the financial impact of the stolen assets rather than pass it on to users. In an update issued on October 30, the exchange said it had frozen about $3 billion in on-chain assets and allocated more than $6.34 billion to cover the incident’s impact. It added that its technical and security teams were still investigating the attack to determine its sequence and the steps needed to prevent a recurrence.
Coinbase has revenue sources beyond spot trading, but trading remains an important factor in the bank’s calculations. The company said subscriptions and services accounted for 49% of third-quarter net revenue, and that prediction-market revenue exceeded $200 million on an annualized basis. Morgan Stanley also said prediction-market revenue had exceeded that level, but estimated that retail spot trading would account for about 40% of its Coinbase revenue forecast for 2027. Coinbase also reported that its share of cryptocurrency trading volume reached 10.7% in the third quarter, with gains in spot and derivatives trading for the fourth consecutive quarter. The performance combines growth in some activities and an improved market share with a significant reliance on trading revenue in the bank’s forecasts.
Morgan Stanley estimated adjusted EBITDA of about $2.4 billion in 2028 after revising its forecasts, a level 14% below 2025. The report described the revised path as “a less pronounced recovery, rather than a return to the profits of the previous market cycle.” That outlook links the weaker fourth-quarter transaction revenue run rate to cuts in revenue and earnings forecasts for the following two years. The bank’s assessment remains contingent on the trajectory of trading activity and the revenue mix, as the company seeks to grow subscriptions, services and prediction markets. The report did not specify when the rating or forecasts would next be reviewed.