CoinDesk
Morgan Stanley downgraded Coinbase to underweight from equalweight and cut its price target to $120 from $258. Analyst Michael Cyprys cited weak crypto trading activity and deteriorating confidence in an earnings recovery, with the bank sharply lowering forecasts through 2028.
Why it matters
Coinbase depends heavily on transaction fees, leaving earnings exposed when trading activity fades. Third-quarter revenue fell 35% year over year to $1.22 billion, while transaction revenue dropped 44% to $590 million. Subscription and services revenue declined 20% to $570 million.
The pressure persisted despite a rebound in crypto prices. Market trading volume fell 10% during the quarter, and volatility reached multiyear lows. Morgan Stanley also pointed to uncertainty in crypto markets following the recent Binance hack.
Market impact
Morgan Stanley cut its 2027 revenue forecast by 28% and adjusted EBITDA estimate by 47%. For 2028, it lowered revenue and adjusted EBITDA estimates by 18% and 25%, respectively. The bank now projects $2.4 billion in normalized EBITDA for 2028, about 14% below 2025 levels, and reduced its valuation multiple from 20 times EBITDA to 12 times.
Coinbase shares fell 2.3% in early trading to $140.25, extending a 10% decline from the prior week. The company’s fourth-quarter outlook offered limited evidence of a sharp rebound: it reported about $165 million in transaction revenue through Oct. 25 and forecast $550 million to $630 million in subscription and services revenue. Adjusted expenses are expected at $1.01 billion to $1.16 billion, versus $975 million in the third quarter.
Frequently asked questions
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Why did Morgan Stanley downgrade Coinbase?
Analyst Michael Cyprys cited weak crypto trading activity, a softer revenue outlook and uncertainty in crypto markets. The bank said confidence in an earnings recovery had deteriorated.
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How much did Coinbase revenue fall in the third quarter?
Revenue declined 35% year over year to $1.22 billion. Transaction revenue fell 44% to $590 million, while subscription and services revenue dropped 20% to $570 million.
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How did Morgan Stanley change its Coinbase forecasts?
It cut its 2027 revenue forecast by 28% and adjusted EBITDA estimate by 47%. For 2028, it lowered revenue and adjusted EBITDA estimates by 18% and 25%.
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What does Morgan Stanley expect Coinbase to earn in normalized EBITDA by 2028?
The bank forecasts $2.4 billion in normalized EBITDA for 2028, about 14% below 2025 levels. It also cut the valuation multiple applied to EBITDA from 20 times to 12 times.
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What did Coinbase forecast for fourth-quarter expenses?
Coinbase expects adjusted expenses of $1.01 billion to $1.16 billion, up from $975 million in the third quarter. It forecast $550 million to $630 million in subscription and services revenue.
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