Morgan Stanley Downgrades Coinbase and Slashes Price Target by 53% on Weak Earnings Outlook

Morgan Stanley Lowers Coinbase Rating Amid Subdued Crypto Activity

Investment bank Morgan Stanley has downgraded cryptocurrency exchange Coinbase Global Inc. (NASDAQ: COIN) from Equalweight to Underweight, cautioning that a persistent deceleration in digital asset trading activity and muted revenue generation could dampen the company’s financial performance over the long term. Following the announcement, Coinbase shares slipped 2.3% in early trading to $140.25, extending a 10% decline experienced the previous week.

The rating adjustment was driven by mounting challenges across the digital asset sector, which has faced a difficult year marked by erratic price swings and consecutive waves of market sell-offs. Even during intervals of price stabilization or recovery, trading volumes on centralized trading venues have failed to rebound substantially, directly impacting platforms that generate the bulk of their earnings from transaction volume fees.

Analyst Slashes Price Target Citing Heightened Market Uncertainty

“Confidence in the earnings recovery has deteriorated,” Morgan Stanley analyst Michael Cyprys wrote in a research note published on Monday. Accompanying the rating downgrade, Cyprys cut his 12-month price target on Coinbase to $120, down more than 53% from his previous target of $258.

In his assessment, Cyprys pointed to an aggregate slowdown in retail and institutional participation, softened revenue trajectories, and heightened market hesitation following the recent security breach involving competing crypto exchange Binance. These macroeconomic and sector-specific headwinds led the firm to project a more prolonged recovery period for Coinbase’s core business lines.

Steep Reductions to Long-Term Financial Estimates

Reflecting the subdued engagement levels across digital asset markets, Morgan Stanley made drastic downward revisions to its multi-year earnings model for the exchange. The bank decreased its revenue forecast for Coinbase in 2027 by 28% and slashed its projected 2027 adjusted EBITDA by 47%.

The conservative outlook extends into subsequent fiscal periods as well. For 2028, Morgan Stanley lowered its revenue projection for Coinbase by 18% and cut its adjusted EBITDA expectations by 25%, signaling growing skepticism regarding the speed at which retail trading enthusiasm and higher fee revenues will return.

Why This Matters

Coinbase serves as a key barometer for institutional and retail engagement in the broader cryptocurrency ecosystem. Because the company’s primary monetization engine remains closely tied to transaction volumes, a prolonged phase of depressed retail activity directly threatens its cash generation and profitability margins. Furthermore, regulatory scrutiny and security vulnerabilities across the global digital asset space—such as the incident affecting Binance—continue to weigh on investor sentiment, causing traditional Wall Street analysts to recalibrate valuation multiples and earnings horizons for crypto-native equities.

Frequently Asked Questions

Why did Morgan Stanley downgrade Coinbase to Underweight?

Morgan Stanley downgraded the stock due to a combination of declining cryptocurrency trading volumes, a weaker revenue growth outlook, and broader market uncertainty following a recent hack at Binance.

What is Morgan Stanley’s new price target for Coinbase?

Morgan Stanley analyst Michael Cyprys reduced the firm’s price target on Coinbase shares to $120 from the prior target of $258.

How significantly were Coinbase’s financial forecasts adjusted?

Morgan Stanley cut its 2027 revenue and adjusted EBITDA estimates by 28% and 47%, respectively. For 2028, it reduced revenue projections by 18% and adjusted EBITDA estimates by 25%.