Coinbase is facing fresh pressure after Morgan Stanley downgraded its stock from Equalweight to Underweight, delivering a major cut to its price target from $258 to just $120.
The downgrade reflects growing concerns about Coinbase's earnings recovery, weaker crypto trading activity, and an uncertain market environment.
š Why Is Morgan Stanley Turning Bearish?
Analyst Michael Cyprys highlighted several challenges affecting Coinbase's future performance:
- Declining cryptocurrency trading activity.
- A weaker revenue outlook.
- Uncertainty across crypto markets.
- Concerns following the reported Binance security incident.
Morgan Stanley also significantly reduced its financial forecasts.
š» Lower Revenue and Earnings Expectations
The bank cut its estimates substantially:
- 2027 Revenue Forecast: Reduced by 28%.
- 2027 Adjusted EBITDA: Reduced by 47%.
- 2028 Revenue Forecast: Reduced by 18%.
- 2028 Adjusted EBITDA: Reduced by 25%.
Morgan Stanley now expects Coinbase to generate approximately $2.4 billion in normalized EBITDA by 2028, around 14% below its 2025 level.
It also reduced its valuation multiple from 20x to 12x EBITDA.
š Weak Earnings Add to the Pressure
Coinbase's third-quarter results raised further concerns.
- Revenue declined 35% year over year to $1.22 billion.
- Transaction revenue dropped 44% to $590 million.
- Crypto trading volume declined 10%.
- Lower market volatility affected trading activity.
The company's fourth-quarter outlook also offered limited signs of a strong recovery, with approximately $165 million in transaction revenue recorded through October 25.
ā ļø COIN Stock Faces More Pressure
Coinbase shares fell approximately 2.3% in early trading to around $140.25, adding to last week's 10% decline.
The latest downgrade highlights how quickly changing crypto market conditions can affect companies that depend heavily on trading activity.
š„ Final Thoughts
Coinbase is facing a challenging period as weaker trading volumes, declining transaction revenue, and reduced earnings expectations weigh on investor confidence.
However, the long-term outlook will depend on crypto market recovery, trading demand, and the company's ability to improve revenue performance.
What do you think? Is Coinbase (COIN) becoming a buying opportunity at these levels, or could more downside be ahead?
Share your thoughts below! š
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